10. Pricing (understanding and capturing
customer value)
Type Lecture
Completed
https://app.jungleai.com/deck/IWFOQZFW29eyPooUl7SQ/marketing---ch101-flashcards-
Flashcards multiple-choice-questions-quiz?r=m9iaHSxCYeYwBXX4JWoHrSYNOqez2U
Prac
Main points of chapter 10
👉🏻 0. before we start
0.1 Major pricing methods (3 main strategies,
4 subtypes)
What is price?
2. Major pricing strategies
Three major pricing strategies
2.2 Customer value pricing
3. Cost based pricing
4. Competition based pricing
3. Internal and external considerations affecting
price decisions
3.1 Internal factors
3.2 External factors
0. before we start
10. Pricing (understanding and capturing customer value) 1
, Take a good look at this diagram
It represents 17 pricing categories and puts them into three groups
0.1 Major pricing methods (3 main strategies, 4 subtypes)
These major pricing methods are the foundational approaches used to set up a price
Customer value-based pricing
pricing is based on percieved customer value rather than a cost
1. good value pricing
Balances quality and price
~ walmart’s low cost products
2. Value added pricing
adds premium features/services to justify higher prices
~ Apple products
Cost based pricing
Costs are based by production cost plus an extra
(for profit most likely)
1. Cost-plus pricing
adds a fixed percentage to the main cost
~ Cost to make + 20% to profit
10. Pricing (understanding and capturing customer value) 2
, 2. Break-even & target-return pricing
Sets price to cover costs or achieve a profit target
~ Amazon: when selling the e-kindle, they sold at a loss. Instead of
making profit from selling the device, amazon made money by selling e-
books, subscriptions and accessories
👉🏻 Break even pricing is used to build a customer base (even
through selling at a loss)
and make profits in the long run from other forms of
connected sales
Playstation plus
xbox live
…
Competion-based pricing
company sets its prices based on competitor’s prices
(instead of just costs or customer value)
~ Airlines
prices constantly change based on competitor’s prices
~ Tech products
Samsung often prices its smartphones below apple’s to stay competitive
~ Retail
walmart monitors target’s prices and ajusts accordingly to attract cusomers
What is price?
Price Definition of Price
Narrow
Price is the amount of money charged for a product
~
Broader
Price is the sum of all the values that customers exchange for
gaining the benefits of having or using the product
Price in the marketing mix
price is…
10. Pricing (understanding and capturing customer value) 3
customer value)
Type Lecture
Completed
https://app.jungleai.com/deck/IWFOQZFW29eyPooUl7SQ/marketing---ch101-flashcards-
Flashcards multiple-choice-questions-quiz?r=m9iaHSxCYeYwBXX4JWoHrSYNOqez2U
Prac
Main points of chapter 10
👉🏻 0. before we start
0.1 Major pricing methods (3 main strategies,
4 subtypes)
What is price?
2. Major pricing strategies
Three major pricing strategies
2.2 Customer value pricing
3. Cost based pricing
4. Competition based pricing
3. Internal and external considerations affecting
price decisions
3.1 Internal factors
3.2 External factors
0. before we start
10. Pricing (understanding and capturing customer value) 1
, Take a good look at this diagram
It represents 17 pricing categories and puts them into three groups
0.1 Major pricing methods (3 main strategies, 4 subtypes)
These major pricing methods are the foundational approaches used to set up a price
Customer value-based pricing
pricing is based on percieved customer value rather than a cost
1. good value pricing
Balances quality and price
~ walmart’s low cost products
2. Value added pricing
adds premium features/services to justify higher prices
~ Apple products
Cost based pricing
Costs are based by production cost plus an extra
(for profit most likely)
1. Cost-plus pricing
adds a fixed percentage to the main cost
~ Cost to make + 20% to profit
10. Pricing (understanding and capturing customer value) 2
, 2. Break-even & target-return pricing
Sets price to cover costs or achieve a profit target
~ Amazon: when selling the e-kindle, they sold at a loss. Instead of
making profit from selling the device, amazon made money by selling e-
books, subscriptions and accessories
👉🏻 Break even pricing is used to build a customer base (even
through selling at a loss)
and make profits in the long run from other forms of
connected sales
Playstation plus
xbox live
…
Competion-based pricing
company sets its prices based on competitor’s prices
(instead of just costs or customer value)
~ Airlines
prices constantly change based on competitor’s prices
~ Tech products
Samsung often prices its smartphones below apple’s to stay competitive
~ Retail
walmart monitors target’s prices and ajusts accordingly to attract cusomers
What is price?
Price Definition of Price
Narrow
Price is the amount of money charged for a product
~
Broader
Price is the sum of all the values that customers exchange for
gaining the benefits of having or using the product
Price in the marketing mix
price is…
10. Pricing (understanding and capturing customer value) 3
