Pricing to Capture Customer Value

Companies today face a fierce and fast-changing pricing environment. Value-seeking customers have put increased pricing pressure on many companies. Price is a complex issue in the modern marketing process and remains an important element in the marketing mix. This module highlights both internal and external factors that play a critical role in a company’s pricing decisions. Some of the key arguments are that pricing changes over the life cycle of a product and that the mix of the offer will influence pricing.

The three major pricing strategies are introduced in this module. These are the customer-based approach, the cost-based approach, and the competition-based approach. New and imitative product pricing strategies are also discussed and emphasis is placed upon the need to use different price strategies when introducing a patent-protected product and when introducing an imitative product.

It is argued that companies adjust their basic prices to account for various customer differences and changing situations. In this context, price-adjustment strategies including discount pricing and allowances, segmented pricing, psychological pricing, promotional pricing, value pricing, geographic pricing and international pricing are discussed.

Definitions

1. Price

2. Customer value – based pricing

3. Break-even pricing

4. Price Elasticity of demand:

5. Market Skimming

6. Market-penetration:

7. Cost plus Pricing

8. Competition based pricing

9. Captive Product Pricing

10. Pricing Value