Prisstrategi Flashcards
Beskriv efterspørgselselasticitet
Ligning:
Elasticitet = DeltaQ/DeltaP*P/Q
En 1% stigning I pris fører til et ε% fald i den efterspurgte mængde
• Measures of elasticity
o Perfectly inelastic: ε = 0 (vertical curve)
o Inelastic: 0 > ε > -1 (common for necessities)
o Unitary elasticity: ε = -1
o Elastic: ε < -1 (common for luxury goods. Often true for relatively expensive goods or goods with close substitutes)
o Perfectly elastic: ε = ∞ (horizontal curve)
• The relationship between the price of 1 product and the quantity demanded of another is an important measure. It is known as the cross price elasticity of demand.
o De er en substitut hvis krydspriselasticiteten > 0
o Goderne er komplimentære hvis krydspriselasticiteten < 0
Beskriv en break-even analyse, pris, volume
- Break-even analysis - the calculation of the quantity needed to be sold to cover total cost
- Break-even pricing - setting price to break even on the costs of making and marketing a product or setting price to make a target profit
- The breakeven volume is the volume needed to cover the fixed costs on the basis of a particular contribution per unit. Although break even volume can be estimated graphically it can be computed more directly as follows:
Salgspris - variable omkostninger = contribution per unit
Breakeven volumen = faste omkostninger/contribution per unit
Break even market share
• Market share is constrained between 0 and 100%, break even market share provides a better framework from which to judge profit potential and risk. To compute breakeven market share requires only that we divide the break-even volume by the size of the total market
break even market share = break even volume/total market*100
Beskriv pricing framework
- Pricing policy is an important strategic and tactical competitive weapon that in contrast to other elements of the global marketing mix is highly controllable and inexpensive to change and implement. Therefore, pricing strategies and actions should be integrated with the other elements of the global marketing mix
- According to the pricing framework model factors affecting international pricing can be broken down into 2 main groups, internal and external factors, and four subgroups, firm level factors, product factors, environmental factors, market factors.
Firm level factors (internal)
• International pricing is influenced by past and current corporate philosophy, organization and managerial policies
Product factors (internal)
• Key product factors include the unique and innovative features of the product and availability of substitutes
• The extent to which the organization has to adapt or modify the product or service and the level to which the market requires service around the core product will affect costs and thereby have some influence on pricing
• Price escalation - the tendency of prices to creep upwards and making products and services abroad through several middlemen
• Markup - a markup expressed as a percentage of the cost of an item
Environmental factors (external) • The environmental factors are external to the firm thus uncontrollable variables in the foreign market. The national government control of exports and imports is usually based on political and strategic considerations • Tariff - a tax levied by a government against certain imported products. Tariffs are designed to raise revenue or to protect domestic firms • Non-tariff trade barriers - nonmonetary barriers to foreign products such as biases against a foreign company’s bids or product standards that go against a foreign company's product features
Market factors (external) • One of the critical factors in the market is the purchasing power of the customers. The pressure of competitors may also affect the international pricing. The firm has to offer a more competitive price if there are other sellers in the market thus the nature of competition (oligopoly, monopoly, monopolistic competition, perfect competition) can influence the firm's pricing strategy
Value based pricing
- The pricing is based on the customer’s perception of the supplier’s product rather than on the costs of producing the product.
- Value-in-use - The satisfaction which one obtains from the use of a commodity is known as the value-in-use.
- Value in exchange - the exchange in the amount of the goods and services (depends on time and place since things aren’t of the same value in all markets)
Total cost of ownership (value pricing)
Value pricing based on total cost of ownership
• Total cost of ownership - TCO is all the lifetime costs that follow from owning the product over its entire lifetime including costs connected to disposal of the product
• TCO measures the life cycle economic costs and benefits to the user of 1 product when compared with a reference product.
• Ownership brings purchase costs but ownership can also bring costs for installing, deploying, operating, upgrading and maintaining the same assets
Nye produkter: Skimming pricing
- Skimming price - a relatively high price often charged at the beginning of a product’s life. The price is systematically lowered as time goes by
- The policy of using schema at the outset, followed by penetration pricing as the product matures, is termed time segmentation. A skimming policy enables to marketer to capture early profits then reduced the price to reach segments that are more price sensitive. It also enables the innovator to recover high developmental costs quicker
- Grey marketing - the marketing of authentic, legally trademarked goods through unauthorized channels
- Parallel importing - when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer’s normal distribution; caused by big price differences for the same product between different countries
Nye produkter: Penetration pricing
- Penetration price - a low introductory price intended to quickly establish a product in the market
- The viability of this strategy increases with the potential size of the future market. By taking a large share of new sales, experience can be gained when there is a large market growth rate
Market pricing
• The final customer price is based on competitive prices. This approach requires the exporter to have a thorough knowledge of product costs as well as confidence that the product lifecycle is long enough to warrant entry into the market
Hvornår laver man ændringer i prisen?
- Price changes on existing products are called for when a new product has been launched or when changes are occurring in overall market conditions (such as fluctuations in foreign exchange rates)
- The timing of price changes can be nearly as important as the changes themselves
Experience curve pricing
- Price changes usually follow changes into a product’s stage in the life cycle. As the product matures more pressure will be put on the price to keep the product competitive despite increased competition and less possibility of differentiation
- The experience curve has its roots in a commonly observed phenomenon called the learning curve which states that as people repeat a task they learn to do it better and faster
Product line pricing
- Product line pricing - setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features and competitors prices
- Products that have positive cross elasticity are substitutes; lowering the price of one product will decrease the demand for the other product
- Products that have a negative cross elasticity are complementary products; lowering the price for one product will increase the demand for both products
- Loss lender - a product priced below cost to attract customers who may then make additional purchases
Freemium pricing
• Freemium (free + premium = freemium) - a pricing strategy by which a product or service is provided free of charge, but money is then charged afterwards for more advanced features or functionality
Dynamic pricing (for flere segmenter)
- Dynamic pricing - dynamic pricing means that the price of a product or service is flexible and not firmly set. Instead the price can be changed based on different circumstances such as increase in demand, peak user times and other changing marketing conditions
- An advantage of using dynamic prices in digital marketing strategy is that it allows one to find the optimal price which is most likely to maximize sales, conversion, and boost margins
Geographic segments
• It is possible that price sensitivity varies across geographic regions
• E.g EU trade (common price levels are set in the EU)
Usage segments
• It is common for marketers to recognize high volume users and reward them with different prices (E.g club members)
Time segments (off-peak pricing) • The most common form of usage segmentation pricing is based on the time of usage. Long distance phone companies, electricity utilities, hotels, bars, restaurants, amusement parks and cinemas all use off-peak demand pricing
Demographic segments
• A concert hall might provide special prices for students or children to encourage attendance or may give discounts to senior citizens.
Subscription based pricing
• Subscription based online services (SOS) - refers to an e-business that provides periodic delivery of a customized box of merchandise or services directly to the customers home for weekly/monthly/quarterly/yearly subscription fee or it may be the digital services where customers can subscribe to a specific vendor’s IT services.
