the strategy and tactics of pricing

300 Pages·2017·5.75 MB·English

HE TRATEGY AND ACTICS OF RICING
T S T P
QWerty On KAT For more
Fifth Edition
The Strategy and Tactics of Pricing
A GUIDE TO GROWING MORE PROFITABLY
Thomas T. Nagle
Monitor Group

John E. Hogan
Monitor Group

Joseph Zale
Monitor Group
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Library of Congress Cataloging-in-Publication Data
Nagle, Thomas T.
The strategy and tactics of pricing / Thomas T. Nagle, John E. Hogan,
Joseph Zale.—5th ed.
p. cm.
ISBN-13: 978-0-13-610681-4
ISBN-10: 0-13-610681-1
1. Pricing. 2. Marketing—Decision making. I. Hogan, John E., Ph.D.
II. Zale, Joseph. III. Title.
HF5416.5.N34 2010
658.8’16—dc22
2009047553
10 9 8 7 6 5 4 3 2 1
ISBN 13: 978-0-13-610681-4
ISBN 10: 0-13-610681-1
BRIEF CONTENTS
Chapter 1 Strategic Pricing
Coordinating the Drivers of Profitability
Chapter 2 Value Creation
The Source of Pricing Advantage
Chapter 3 Price Structure
Tactics for Pricing Differently Across Segments
Chapter 4 Price and Value Communication
Strategies to Influence Willingness-to-Pay
Chapter 5 Pricing Policy
Managing Expectations to Improve Price Realization
Chapter 6 Price Level
Setting the Right Price for Sustainable Profit
Chapter 7 Pricing Over the Product Life Cycle
Adapting Strategy in an Evolving Market
Chapter 8 Pricing Strategy Implementation
Embedding Strategic Pricing in the Organization
Chapter 9 Costs
How Should They Affect Pricing Decisions?
Chapter 10 Financial Analysis
Pricing for Profit
Chapter 11 Competition
Managing Conflict Thoughtfully
Chapter 12 Measurement of Price Sensitivity
Research Techniques to Supplement Judgment
Chapter 13 Ethics and the Law
Understanding the Constraints on Pricing
CONTENTS
Preface
Chapter 1 Strategic Pricing
Coordinating the Drivers of Profitability
Cost-Plus Pricing
Customer-Driven Pricing
Share-Driven Pricing
What Is Strategic Pricing?
Value Creation
Price Structure
Price and Value Communication
Pricing Policy
Price Level
Implementing the Pricing Strategy
Summary • Notes
Chapter 2 Value Creation
The Source of Pricing Advantage
The Role of Value in Pricing
How to Estimate Economic Value
Competitive Reference Prices
Estimating Monetary Value
Monetary Value Estimation: An Illustration
Estimating Psychological Value
Psychological Value Estimation: An Illustration
The High Cost of Shortcuts
Value-Based Market Segmentation
Step 1: Determine Basic Segmentation Criteria
Step 2: Identify Discriminating Value Drivers
Step 3: Determine Your Operational Constraints and Advantages
Step 4: Create Primary and Secondary Segments
Step 5: Create Detailed Segment Descriptions
Step 6: Develop Segment Metrics and Fences
Summary • Notes
Chapter 3 Price Structure
Tactics for Pricing Differently Across Segments
Price-Offer Configuration
Optimizing an Offer Bundle
Designing Segment Specific Bundles
Unbundling Strategically
Price Metrics
Creating Good Price Metrics
Performance-Based Metrics
Tie-Ins as Metrics
Price Fences
Buyer Identification Fences
Purchase Location Fences
Time of Purchase Fences
Purchase Quantity Fences
Summary • Notes
Chapter 4 Price and Value Communication
Strategies to Influence Willingness-to-Pay
Value Communication
Adapting the Message for Product Characteristics
Adapting the Message to Purchase Context
The Buying Process
Multiple Participants in the Buying Process
Price Communication
Proportional Price Evaluations
Reference Prices
Perceived Fairness
Gain–Loss Framing
Summary• Notes
Chapter 5 Pricing Policy
Managing Expectations to Improve Price Realization
Policy Development
Policies for Responding to Price Objections
The Problem with Ad Hoc Negotiation
The Benefits of Policies for Price Negotiation
Policies for Different Buyer Types
Policies for Dealing with Power Buyers
Policies for Managing Price Increases
Policies for Leading an Industry-Wide Increase
Policies for Transitioning from Low One-Off Pricing
Policies for Dealing with an Economic Downturn
Policies for Promotional Pricing
Summary • Notes
Chapter 6 Price Level
Setting the Right Price for Sustainable Profit
The Price-Setting Process
Defining the Price Window
Establishing an Initial Price Point
Pricing Objectives
Defining the Price-Volume Trade-off
Estimating Consumer Response
Communicate New Prices to the Market
Summary • Notes
Chapter 7 Pricing Over the Product Life Cycle
Adapting Strategy in an Evolving Market
New Products and the Product Life Cycle
Pricing the Innovation for Market Introduction
Communicating Value with Trial Promotions
Communicating Value with Direct Sales
Marketing Innovations Through Distribution Channels
Pricing New Products for Growth
Pricing within a Differentiated Product Strategy
Pricing within a Cost Leadership Strategy
Price Reductions in Growth
Pricing the Established Product in Maturity
Pricing a Product in Market Decline
Alternative Strategies in Decline
Summary • Notes
Chapter 8 Pricing Strategy Implementation
Embedding Strategic Pricing in the Organization
Organization
Organizational Structure
Decision Rights
Pricing Processes
Motivation
Customer Analytics
Process Management Analytics
Performance Measures and Incentives
Managing the Change Process
Senior Management Leadership
Demonstration Projects
Summary • Notes
Chapter 9 Costs
How Should They Affect Pricing Decisions?
The Role of Costs in Pricing
Determining Relevant Costs
Why Incremental Costs?
Why Avoidable Costs?
Avoiding Misleading Accounting
Estimating Relevant Costs
Activity-Based Costing
Percent Contribution Margin and Pricing Strategy
Managing Costs in Transfer Pricing
Summary • Notes
Chapter 10 Financial Analysis
Pricing for Profit
Break-even Sales Analysis: The Basic Case