The Strategy and Tactics of Pricing

For undergraduate introduction to Market Pricing courses.

A comprehensive and practical, step-by-step guide to pricing analysis and strategy development.

The Strategy and Tactics of Pricing shows readers how to manage markets strategically rather than simply calculate pricing based on product and profit in order to improve their competitiveness and the profitability of their offers. The fifth edition contains a new chapter on price implementation and several updated examples on pricing challenges in today's markets.

KEY BENEFIT: The Strategy and Tactics of Pricing shows readers how to manage markets strategically-rather than simply calculate pricing based on product and profit-in order to improve their competitiveness and the profitability of their offers.

KEY TOPICS: Strategic Pricing; Value Creation; Price Structure; Price and Value Communication; Pricing Policy; Price Level; Pricing Over the Product Life Cycle; Pricing Strategy Implementation; Costs; Financial Analysis; Competition; Measurement of Price Sensitivity; Ethics and the Law

MARKET: For those interested in learning about market pricing

Preface	p. xiii
Strategic Pricing	p. 1
Coordinating the Drivers of Profitability
Cost-Plus Pricing	p. 2
Customer-Driven Pricing	p. 3
Share-Driven Pricing	p. 4
What Is Strategic Pricing?	p. 5
Value Creation	p. 7
Price Structure	p. 9
Price and Value Communication	p. 11
Pricing Policy	p. 12
Price Level	p. 13
Implementing the Pricing Strategy	p. 14
Summary	p. 15
Notes	p. 16
Value Creation	p. 17
The Source of Pricing Advantage
The Role of Value in Pricing	p. 18
How to Estimate Economic Value	p. 21
Competitive Reference Prices	p. 21
Estimating Monetary Value	p. 23
Monetary Value Estimation: An Illustration	p. 26
Estimating Psychological Value	p. 32
Psychological Value Estimation: An Illustration	p. 32
The High Cost of Shortcuts	p. 36
Value-Based Market Segmentation	p. 38
Determine Basic Segmentation Criteria	p. 40
Identify Discriminating Value Drivers	p. 41
Determine Your Operational Constraints and Advantages	p. 41
Create Primary and Secondary Segments	p. 42
Create Detailed Segment Descriptions	p. 44
Develop Segment Metrics and Fences	p. 44
Summary	p. 46
Notes	p. 46
Price Structure	p. 47
Tactics for Pricing Differently Across Segments
Price-Offer Configuration	p. 50
Optimizing an Offer Bundle	p. 51
Designing Segment Specific Bundles	p. 53
Unbundling Strategically	p. 54
Price Metrics	p. 55
Creating Good Price Metrics	p. 56
Performance-Based Metrics	p. 60
Tie-Ins as Metrics	p. 61
Price Fences	p. 63
Buyer Identification Fences	p. 64
Purchase Location Fences	p. 65
Time of Purchase Fences	p. 66
Purchase Quantity Fences	p. 68
Summary	p. 70
Notes	p. 71
Price and Value Communication	p. 72
Strategies to Influence Willingness-to-Pay
Value Communication	p. 73
Adapting the Message for Product Characteristics	p. 74
Adapting the Message to Purchase Context	p. 81
The Buying Process	p. 82
Multiple Participants in the Buying Process	p. 86
Price Communication	p. 87
Proportional Price Evaluations	p. 87
Reference Prices	p. 88
Perceived Fairness	p. 90
Gain-Loss Framing	p. 91
Summary	p. 93
Notes	p. 93
Pricing Policy	p. 96
Managing Expectations to Improve Price Realization
Policy Development	p. 99
Policies for Responding to Price Objections	p. 100
The Problem with Ad Hoc Negotiation	p. 100
The Benefits of Policies for Price Negotiation	p. 102
Policies for Different Buyer Types	p. 103
Policies for Dealing with Power Buyers	p. 108
Policies for Managing Price Increases	p. 110
Policies for Leading an Industry-Wide Increase	p. 111
Policies for Transitioning from Low One-Off Pricing	p. 112
Policies for Dealing with an Economic Downturn	p. 114
Policies for Promotional Pricing	p. 115
Summary	p. 117
Notes	p. 117
Price Level	p. 118
Setting the Right Price for Sustainable Profit
The Price-Setting Process	p. 119
Defining the Price Window	p. 121
Establishing an Initial Price Point	p. 123
Pricing Objectives	p. 125
Defining the Price-Volume Trade-off	p. 129
Estimating Consumer Response	p. 131
Communicate New Prices to the Market	p. 137
Summary	p. 140
Notes	p. 140
Pricing Over the Product Life Cycle	p. 141
Adapting Strategy in an Evolving Market
New Products and the Product Life Cycle	p. 141
Pricing the Innovation for Market Introduction	p. 143
Communicating Value with Trial Promotions	p. 144
Communicating Value with Direct Sales	p. 145
Marketing Innovations Through Distribution Channels	p. 146
Pricing New Products for Growth	p. 146
Pricing within a Differentiated Product Strategy	p. 147
Pricing within a Cost Leadership Strategy	p. 148
Price Reductions in Growth	p. 149
Pricing the Established Product in Maturity	p. 150
Pricing a Product in Market Decline	p. 153
Alternative Strategies in Decline	p. 154
Summary	p. 155
Notes	p. 156
Pricing Strategy Implementation	p. 158
Embedding Strategic Pricing in the Organization
Organization	p. 160
Resale Price-Fixing or Encouragement	p. 312
Vertical Price-Fixing	p. 312
Direct Dealing Programs	p. 314
Resale Price Encouragement	p. 314
Price and Promotional Discrimination	p. 315
Price Discrimination	p. 315
Defenses to Price Discrimination	p. 317
Promotional Discrimination	p. 318
Competitive Injury, Defenses, and Indirect Purchasers	p. 319
Using Nonprice Variables to Support Pricing Goals	p. 320
Vertical Nonprice Restrictions	p. 320
Nonprice Incentives	p. 322
Other Pricing Issues	p. 322
Predatory Pricing	p. 322
Price Signaling	p. 322
Summary	p. 323
Notes	p. 323
Index	p. 331
Table of Contents provided by Ingram. All Rights Reserved.

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The Strategy and Tactics of Pricing

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