Chapter 6 Marketing Management

CHAPTER 6
PRICING STRATEGY IN AN INTEGRATED

MARKET
LEARNING OBJECTIVE
• Realise the importance of price optimisations as well as the effect they have
on companies.
• Acknowledge the significance of pricing strategy in an integrated marketing
plan.
• What are the tactics for ‘psychological pricing’ ?
• Integrated marketing price models and strategies for products, services, and
projects promoted via a digital platform.
PRICE AND MARKETING INTEGRATION
• A specific amount or something is exchanged or demanded in return for another product in

exchange for another item.
• A specific amount is needed to exchange a product or service, which is referred to as the price or
product value.
• The amount of money individuals is willing to pay on product or services determines the value of
the item.
• For example, the introduction of the AEON campaign on myaeon.com.my which acts as an online
platform has shown its commitment to adopting a digital journey. This enables customers to
purchase from their comfort of their own homes.
PRICING FOR A PRODUCT LINE
• Increasingly focusing on product ranges.

• Establish the pricing steps used in each product line to correctly price them.
• Different combinations of product characteristics and value.
• Provide a base product and charge a separate price for every combination of
extra features.
• For example, personalized computers.
PRICING OPTIMISATION AND BUSINESS
IMPACT
• Price in today’s digital era may be defined as anything and everything.

• From product creation to just providing a link to their website.
• Market price given to all a business tangible and intangible assets, the perceived
worth of money.
• Sales and marketing demonstrate the efficacy of such traits.
• All the efforts made by businesses aim to convert explain their worth in terms of
revenue.
PRICE STRATEGY IN ASIA MARKETING
ESSENTIAL
• Behavior
Target • Attitude
Market
• Purchasing Power
Market
• Size
• Consumers need and want

Marketing • Consumers Demand
Mix
• Supply chain management

Distribution
Cost • Just in time
• Acceptance through social media

Integrated • Growth through social media
Marketing
• Long term strategy

Pricing
• Short term strategy
PLANNING AND ANALYSIS OF PRICES
Consumer
Sensitivity
Consumer
Product Cost
Behaviour
Pricing
Strategy
Sustainable
Competitive
Development
Pricing
Goals
Market Demand
PSYCHOLOGICAL PRICING STRATEGIES
• Satisfy customers needs while adding value to goods and services to

maximise profit.
• Effective pricing strategies for a product or service may substantially
increase sales and profit.
Strategies Price
Value • Low Pricing
• Promotion
• Membership
Low Price Online Member Discount

Payment System Online via credit card/ debit card payment
VALUE-BASED PRICING
• Refers to the practice of setting product prices

• Based on the benefits that consumers get rather than on the actual costs of
manufacturing the product.
• For example, high quality food delivered promptly and cheerfully in a clean
and pleasant environment at an affordable price are the four pillars of the
McDonalds brand.
PRICE POLICIES
• Variables that influence to establish its price policies.
• Depending on their role, internal or external influences or mix of both.
• Develop strategies to accomplish their marketing and overall organizational goals
Define
Customers
Need & Want
Set Price Based

on Customer
Value
Target Cost Product Value
Traditional Target Market
Integrated
Location
Marketing
PRICING RESEARCH
• Customer attention is diverted away from the closest comparable item.

• Creating a price range that goes from zero to anything is far more complex
than doing detailed pricing research.
• Businesses can experiment with the psychological pricing methods.
SPONSORSHIP PRICING
• Through sponsorship and participation in high-profile events and sponsorship
opportunities.
• To showcasing their goods and services.
• To expand their networks and bring customers into their hubs
Stage Target Units @ Profit per Total
unit
1 High Income Group 100@ $600 per unit $60,000
2 High Income Group 300@ $300 per unit $90,000

3 Middle Income Group 350@ $130 per unit $52,000
4 Low Income Group 200 @ $50 per unit $10,000
950 unit $205,500

5 Sustainable development goal 50 unit Free
Branding 1000 units
Table shows Pricing strategy for sustainable development

COMPARATIVE PRICING
Low Price
Direct to
Buyer
Order
Negotiation
Alibaba Bulk for Bulk
Order
Manufacturing
Direct from
Supplier
Low Cost
Alibaba’s comparative pricing strategy

Table Alibaba vs AliExpress pricing
approaches
Alibaba AliExpress
Low Cost No minimum
Stock Retail approach
Direct from supplier Cheaper
Customised order Not customised
Wholesale Higher than wholesale price
DIFFERENTIATE THE PRICING VISUALLY
• Sales grow when a business offers a discount that includes the beginning
price and current price.
• Customer believe they are receiving bargain are not interested in
investigating the price decrease on the introduction price.
• Leads consumers to interpret the visual difference as a more significant price
difference.
STRATEGY FOR MARKET EXPANSION AND
PRICING
• The practice of selling goods at the lowest possible price to attract customers
and acquire a substantial market share is known as price gouging.
PRICING STRATEGY FOR PRODUCT MIX
Pricing by product line
• Increasingly developing product ranges.
• Complicated since businesses must determine the price steps utilized between
each product throughout the range.
• Price levels are often used to target different product features and values that are
characterised by a specific price level.
Pricing for supplementary products
• Involves the business offering an essential product
• Choices added to the base product at the customer’s request
• Well known and notorious technique automobile industry.
• Many manufactures like computer makers, charge extra for optional products.
Pricing of captive products
• To price products must be utilised in conjuction with the main product.
• Razor blades used as an illustration in the text.
• Razor offered low price while price of blades is mark up significantly.
Pricing for by-products
• Manufacturing and distribution processes may marketed ad by-products.
• Selling various products, manufactures can reduce prices, costs of their principal
goods.
• Prices of primary goods must be raised to compensate for the waste of scarcity of
by-products. (If this is not the case)
Pricing for product bundles
• E.g Season tickets and group tickets.
• Combines multiple goods and sells them at a lower price than cost of each product
bought individually.
Price reductions
• May be necessary due to excess supply, the decline market share.
• Efforts to monopolise a market by lowering costs to a competitive advantage.
Increases in prices
• Tendency to trade on inflationary movements and increase costs outside the
inflation rate is significant cause of prices rising.
• Due to rising inflation.
• Growing demands.
• Resulted in higher profitability.
PG 154-155
• PRICING STRATEGY FOR PRODUCT MIX

- Pricing by product line
- Pricing of captive products
- Pricing for by products
- Pricing for product bundles
- Pricing reductions
- Increases in prices
THAT’S ALL FOR CHAPTER 6
THANK YOU

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CHAPTER 6

PRICING STRATEGY IN AN INTEGRATED

• A specific amount or something is exchanged or demanded in return for another product in

• Increasingly focusing on product ranges.

• Price in today’s digital era may be defined as anything and everything.

• Consumers need and want

• Supply chain management

• Acceptance through social media

• Long term strategy

• Satisfy customers needs while adding value to goods and services to

Low Price Online Member Discount

• Refers to the practice of setting product prices

Set Price Based

Target Cost Product Value

Traditional Target Market

• Customer attention is diverted away from the closest comparable item.

2 High Income Group 300@ $300 per unit $90,000

4 Low Income Group 200 @ $50 per unit $10,000

950 unit $205,500

Branding 1000 units

Table shows Pricing strategy for sustainable development

Alibaba’s comparative pricing strategy

• PRICING STRATEGY FOR PRODUCT MIX

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