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附录附录A：PricingStrategyRussell.S.WinnerPriceisthemostflexibleelementinmarketingmix.Unlikeproductandplace,pricemaychangeextremelyfastincurrentbusinessenvironment.Pricingisacorepartofcorporatestrategy,whichdeterminestheprofitability,andmarketsharethecompanytakes.Tooptimizeproductspriceinthiscompetitiveenvironment,coststructureisnottheonlyattributeneedtobeconsidered.Weshouldalsotakeproductlifecircle,pricesensitivityoftargetcustomersandcompetitiveenvironmentintoaccount.PricingforStability，Sometimescustomersforindustrialproductsareasconcernedaboutpricestabilityastheyareaboutactualpricelevels.Thisisbecauseitisdifficulttodevelopprofitforecastsandlong-rangeplanswhenpricesforproductsandservicesthatconstituteasubstantialportionofthebuyer’scostsfluctuatedramatically.Telephoneratesforlargeuserssuchastelemarketingfirmsandbanksfallintothiscategory.Suchcustomersexpectratestoriseovertime.However,significantpricehikesatrandomintervalsplayhavocwiththeirplanningprocesses.Asaresult,thesefirmswouldratherpayasomewhathigheraverageratethanbesubjectedtoconstantfluctuations.Forwardcontractsonrawmaterialsplaythisroleinmanymanufacturingindustries.Competitivepricingdescribesasituationinwhichyoutrytopriceatthemarketaverageormatchaparticularbrand’sprice.Thisisappropriatewhencustomershavenotbeenpersuadedthatsignificantdifferencesexistamongthecompetitorsandthattheyviewtheproductinacommodity.Itmayalsobenecessaryinacategorywithhighfixedcostsbecauseanylossofsalesvolumedrivesdownsalesandgenerateslessrevenuetocoverthosecosts.Competitionandpricing，Sofar,thediscussionaboutsettingpricehasdescribedtwokeyelementsofthemarketingmanager’thinking:themarketingstrategyandthevaluecustomersplaceontheproduct.Thefirstisobviouslyaninternalfactorbecausetheexternalelementsaffectingalldecisions:customers.Athirdcriticalelementinpricingdecisionsisthecompetition.Competitors’pricesactasareferencepoint,eitherexplicitly(asshowninthevaluecomputationsearlierinthischapter)orimplicitlyasawaytoassessthepriceoftheproductinquestion.Competitors’pricesdonotnecessarilyrepresentwillingnesstopaybecausethesetofpossiblepricesormarketingstrategiesmayhavebeenlimited;thatis,thecompetitorsmaynothaveanaccurateideaofcustomers’willingnesstopay.Competitors’CostsMarketingmanagerscannotmakeintelligentpricingdecisionswithouthavingsomeestimateoftherelativecostpositionsheldbycompetitors.Evenbetterareestimatesoftheactualcosts.Anunderstandingofthecoststructureofthemarketprovidesatleasttwotypesofhelp.First,assumingthatnobrandwouldbepricedbelowvariablecost,costestimatesprovideyouwithanideaofhowlowsomecompetitorscanprice.Thiscanbeveryusefulinapricebattleinwhichpricesaregoingdown.Second,costestimatesgiveyousomeideaofthemarginsinthecategoryorindustry.Usingdataonsalesvolume,whichareusuallyeasytoobtain,andinformationonmarketingprogramcosts,youcanthenestimatetotalprofits.Thiscanbeimportantinformationinforecastingthelikelihoodthataproductwillstayinthemarketorestimatingtheamountofmoneyacompetitorhastoputbehindthebrandstrategy.Costscanbeestimatedinseveralways.Acommonapproachformanufacturedproductsistousreverseengineeringtoanalyzethecoststructure.Youshouldpurchasecompetitors’productsandtakethemapart,studyingthecostsofthecomponentsandpackaging.Formanyproducts,managerscanreadilyidentifycomponentsandtheircostsinthemarket.Ifacomponentisproprietary,suchasacustommicroprocessorinacomputer,thecostcanbeestimatedbyengineersorotherpersonnel.Anotherwaytoestimatecosts,oratleastmargins,istousepubliclyavailabledataonthecompetitors.Basedonannualreports,10Kstastments,andthelike,youcanascertainaveragemargins.Thesecanbeassumedtoapplydirectlytothecostestimation,especiallyiftheproductisabigcomponentoftotalsalesorif,asisoftenthecase,thecompanytendstouseaccostpluspercentmarkuppricingstrategy.Particularlyformanufacturedproducts,itispossibletounderstandcurrentcostsandforecastfuturecoststhroughtheuseoftheexperiencecurve.Theconventionalfunctionalrelationshipassumedinexperiencecurveeconomicsisthatcostsareadecreasingfunctionofaccumulatedexperience,orproductionvolume.Thecostsofdeliveringservicesaremoredifficulttoestimate.Becausethecostsassociatedwithserviceproductssuchaslaborandofficespacearelargelyfixed,youcanestimaterelativecostpositionsbyexaminingthenumberofemployees,lookingatefficiencyrationssuchassalesperemployee,andassessingothersimilarmeasures,Again,itisparticularlyusefultounderstandthecoststructurebybecomingacustomerofacompetitor’sservice.Theroleofcosts，Wesuggestedearlierinthischapterthatcostsshouldhavelittletodowiththepricingdecisionotherthantoactasafloororlowerlimitforprice.Inanon-market-drivenfirm,fullcost(variablecostsplussomeallocationforoverhead)plussometargetmarginisusedtosetprice.Thisapproachtotallyignoresthecustomer:Theresultingpricemaybeeitheraboveorbelowwhatthecustomeriswillingtopayfortheproduct，Otherproblemsexistwithusingcoststosetprice.First,thereareatleastfourdifferentkindsofcoststoconsider.Developmentcostsareexpensesinvolvedinbringingnewproductstomarket.Oftenthesecostsarespreadoutovermanyyearsandsometimesdifferentprod