CHAPTER 11
                           PRICING STRATEGY
              Strategic Role of Price
              Analyzing the Pricing Situation
              Selecting the Pricing Strategy
              Determining Specific Prices and Policies
         McGraw-Hill/Irwin                                         Copyright © 2009 by The McGraw-Hill Companies, 
                                           Inc. All rights reserved.
   Pricing Decisions are Creating Major Challenges 
                   for Many Companies
   Examples Include:
   
       Threats to major airlines by discount 
   carriers.
   
       Pressures on drug companies to reduce 
   prices.
   
       Intense price competition on supermarket 
   chains by Wal-Mart and Costco.
   
       Aggressive discounting by U.S. automobile 
   producers to retain market share.
   
       Threats to strong brands by counterfeit 
   products.
                                                          11-3
          STRATEGIC ROLE OF PRICE
    …requires that we put pricing at the beginning 
    of the process.  For example, a multi-part 
    marketing strategy usually is required in value-
    based pricing.  Airlines’ complicated service 
    packages with arcane restrictions, and their 
    multiple channels of distribution must support 
    pricing that reflects different values of the 
    service to different segments.  Without such a 
    strategy, airlines would capture a much smaller 
    portion of the value they have the potential to 
    create.  
    T. Nagle, Marketing News, 11/9/98, 4.                 11-4
               Price in the  Positioning Strategy
                                      Target
                                    market and
                                    objectives
                               Positioning Strategy
             Product                                        Value-Chain
             strategy                                        strategy
                                     Pricing
                                     strategy
                                    Promotion
                                     strategy
                                                                          11-5
                 Pricing Situations
        New product pricing
        Life cycle pricing
        Changing positioning strategy 
        Countering competitive 
         threats
                                                          11-6