MKC2610 Lecture Notes - Lecture 9: Unit Price, Consumer Behaviour, Operations Management
6 Jun 2018
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Week 9 Lecture: Strategic retail operations management in the global market (Pricing)
Agenda
• Pricing concepts
• Challenges for global pricing
• Global pricing objectives and strategies
• Positioning strategies: skimming and penetration
• How to set the prices
• Ethnocentric/polycentric/geocentric pricing decisions
Understanding pricing
• Only element that produces revenue
• Easiest to adjust
• Communicates value positioning
Challenges for global pricing
• Repositioning vs. overall image consistency
• Conflicts between different investment goals
• The interaction of price with other marketing mix elements
o Sophisticated customers may not link price closely
with other factors
o Other countries, price is associated with quality level
o Need to adjust price level to match that perception
o Price transparency: setting price in different places
• Perceived value of offerings in different cultures
• Ease of price comparison for consumers
Retailing pricing strategy must be consistent with the retailer’s overall image(positioning), sales, profit, and
return on investment goals.
Retailer long term objectives à will determine how you set the price
• To maintain a proper position
• To achieve a certain market share – to maintain a proper position in a market
• To gain certain level of profits – reason for doing business
• To increase the growth rate – sales growth %
Market skimming strategy
• Charging a premium price à maximise profits quickly
• Charge high price but low volume of sales
• May occur at the introduction stage of the product life cycle
• Luxury goods marketers use price to differentiate products (eg; Mercedes-Benz)
Penetration pricing strategy
• Charging a low price to penetrate the market quickly
• Goal is to get the market share, to occupy the market
• It is appropriate to saturate market prior to imitation by competitors
Document Summary
Week 9 lecture: strategic retail operations management in the global market (pricing) Pricing concepts: challenges for global pricing, global pricing objectives and strategies. Positioning strategies: skimming and penetration: how to set the prices. Understanding pricing: only element that produces revenue. Challenges for global pricing: repositioning vs. overall image consistency, conflicts between different investment goals. Retailing pricing strategy must be consistent with the retailer"s overall image(positioning), sales, profit, and return on investment goals. Retailer long term objectives will determine how you set the price. To achieve a certain market share to maintain a proper position in a market. To gain certain level of profits reason for doing business. To increase the growth rate sales growth % Market skimming strategy: charging a premium price maximise profits quickly, charge high price but low volume of sales, may occur at the introduction stage of the product life cycle. Luxury goods marketers use price to differentiate products (eg; mercedes-benz)
