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MARKETING CHANNELS
Pricing Strategy
Berman Chapter 9
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• A. Introduction
• B. Price vs Non Price Competition • C. Pricing Objectives
• D. Overall Pricing Strategy • E. Cost-Oriented Pricing
• F. Demand-Oriented Pricing
• G. Competition-Oriented Pricing • H. Integrated Pricing
• I. Pricing policies • J. Gray Markets
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• A. Introduction
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• C. Objectives
– sales based – profit based
– gross margin, return on investment – status quo based
• D. Overall Pricing Strategy
– cost approach
– demand approach
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• E. Cost - Oriented Pricing
– markup pricing
• at retail, at cost
– variable markup policies
– planned initial markup percent by retailers – direct product profitability
• winners - dogs, sleepers - traffic builders
• sources of gross margin data
– Robert Morris Associates
– Dun and Bradstreet Annual Statement Studies – Progressive Grocer Annual Report
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• F. Demand-Oriented Pricing
– demand minus, chain markups
• G. Competition-Oriented Pricing
– competitive bidding
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• I. Determining Pricing Policies
– High, Low Pricing
• forward buying, trade loading
– Every Day Low Pricing EDLP
• J. Gray Market Goods
• domestic vs foreign • parallel vs diverted
– Risks of Gray market
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• Strategies to limit gray marketing
– Identify firms that have resold to gray resellers – Set quantity discounts schedule and price
strategy by market to reduce transshipping
– differentiate products sold to different markets – develop customer awareness of risks with
transshipped goods
– Develop an MIS to monitor above average purchase levels by companies
• Price Guarantees
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• K. Adapting the Price Strategy
– additional discounts, markups
• L. Legal Aspects of Pricing
– resale price maintenance – state sales-below-cost laws – gray market goods
– price discrimination
• Robinson Patman
– Discounts and Terms
