PSU MRKT 485 - PRICE PLANNING AND STRATEGY (13 pages)

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PRICE PLANNING AND STRATEGY



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PRICE PLANNING AND STRATEGY

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Pages:
13
School:
Pennsylvania State University
Course:
Mrkt 485 - BUSINESS TO-BUSINESS MARKETING

Unformatted text preview:

CHAPTER 6 PRICE PLANNING AND STRATEGY Important Topics of This Chapter Pricing in Business to Business Market Major Factors Influencing Pricing Strategy in Business Market Implementation of Different Pricing Methods in Business Market Life Cycle Costing Price Leadership Strategy in Business Market Bidding Strategies in the Business Market Leasing in the Business Market Pricing Discount Strategies in Business Market Different Companies Implementing Different Pricing Objectives Company Objective Alcoa 20 ROI American Can Maintain market share General Foods 33 gross margin National Steel Match the market U S Steel DuPont 8 ROI after taxes Target ROI cost plus continued Different Companies Implementing Different Pricing Objectives cont Take three different products and produce them by exactly the same process in three different companies Because companies use different pricing calculations Product prices will most likely vary by company Price difference usually will not be consistent Obviously this is true if marketers use different strategic markups but it also true of estimated cost or even cost in production One cost element would be fixed cost How does each company determine how much fixed cost should be allocated to each product Solution Competitors prices may be very different from yours Study their historical patterns of bidding Major Factors Influencing Price Decision in Business Market Internal factors Company objectives Marketing mix value Costs Impact on other products Product differentiation External factors Buyers Demand Economic considerations Ethical considerations Competition Suppliers Government legal Pricing Methods in Business Market Marginal pricing contribution pricing Attempts to maximize profits by producing number of units at which marginal cost is just less than or equal to marginal revenue Economic value to the customer A higher price will be paid by buyers who perceive a greater value or benefit to them than what they would receive from buying



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