©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensChapter12PricingProducts:PricingConsiderations,Approaches,andStrategy©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens“Therealissueisvalue,notprice.”-RobertT.Lindgren©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensChapterObjectives•Outlinetheinternalfactorsaffectingpricingdecisions,especiallymarketingobjective,marketing-mixstrategy,costs,andorganizationalconsiderations•Identifyanddefinetheexternalfactorsaffectingpricingdecisions,includingtheeffectsofthemarketanddemand,competition,andotherenvironmentalelements©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensChapterObjectives•Contrastthedifferencesingeneralpricingapproaches,andbeabletodistinguishamongcost-plus,targetprofitpricing,value-basedpricing,andgoingrate•Identifythenewproductpricingstrategiesofmarket-skimmingpricingandmarket-penetrationpricing©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensChapterObjectives•Understandinghowtoapplypricingstrategiesforexistingproducts,suchaspricebundlingandpriceadjustmentstrategies•Discussthekeyissuesrelatedtopricechanges,includinginitiatingpricecutsandpriceincreases,buyerandcompetitorreactionstopricechanges,andrespondingtopricechanges©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensPrice•Priceistheamountofmoneychargedforagoodorservice•Theonlymarketingmixelementthatproducesrevenue•Changingtoomuchchasesawaypotentialcustomers,chargingtoolittlecutsrevenue©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensFactorstoConsiderwhenSettingPrices©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensInternalFactors•MarketingObjectives–Survival–CurrentProfitMaximization–Market-ShareLeadership–BradEquityGrowth–Product-QualityLeadership©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensInternalFactors•MarketingMixStrategy•Costs–Fixedvs.VariableCosts•OrganizationalConsiderations©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensExternalFactorsAffectingPricingDecisions•MarketandDemand•CrossSellingandUpselling•ConsumerPerceptionsofPriceandValue©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensExternalFactorsAffectingPricingDecisions•AnalyzingthePrice–DemandRelationship•PriceElasticityofDemand•FactorsAffectingPriceSensitivity©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensPriceElasticityofDemand©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensFactorsAffectingPriceSensitivity•UniqueValueEffect•SubstituteAwarenessEffect•BusinessExpenditureEffect©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakensFactorsAffectingPriceSensitivity•End-BenefitEffect•TotalExpenditureEffect•SunkInvestmentEffect•PriceQualityEffect©2006PearsonEducation,Inc.MarketingforHospitalityandTourism,4theditionUpperSaddleRiver,NJ07458Kotler,Bowen,andMakens