Managing Business Marketing & Sales

Professor Waldemar A. Pfoertsch弗沃德

Term 4/MBA 2006 Oct. 8 -28, 2007

Group Project

• 40 % Max. 3 Students, Max. 20 pages

• Academic paper on a Business marketing topic of interest to the group (format Journal of Marketing), or

• a case study based on your own experience/company interviews and an analysis of the resolution –

• due date November 2

Project ideas please submit till Friday

• ……

Learning Of Today: Dynamics of Pricing

• China Pricing abroad

• Selected Pricing issues

• Price wars

• Case:– Trilogy Corporation– Texas Instruments

China Pricing Abroad

• Global competition

• Changes of the local conditions

• Exchange rate fluctuations

Plus expected exchangeRate fluctuations of 5%

Plus existing exchangeRate differences to theEURO of 25%

Financial Time, Oct. 16, 2007

Labor & Material Cost are rising

Financial Time, Oct. 16, 2007

The power in industrial power tool brands

2005 2007

TTI Financials

Intel Changes Its Competitive Pricing For Microprocessors

• Innovation Leader

• Ingredient Branding

• Price Leader

Price as part of a total offering - the value statement to the customer

• The key idea is to set price level in such a way that superior value is created for customers.

• Value is composed of benefits received by customers, less the customers’ costs.

• These costs include the price of the product or service.

Objectives Addressed by PricingStrategic Purposes

• Achieving a target level of profitability

• Building goodwill, or relationships, in a market or among certain customers

• Penetration of a new market or segment

• Maximizing profit for a new product

• Keeping competitors out of an existing customer base

Objectives Addressed by PricingTactical Purposes

• Winning the business of a new, important customer

• Penetrating a new account• Reducing inventory levels• Keeping the business of disgruntled customers• Encouraging customers to try a product or

service• Encouraging sales of complementary products

Time

Pricing Throughout the Product Life Cycle and the Technology Adoption Life Cycle

Penetration Pricing

Price Skimming

Competitive Pricing

Price Skimming

Other Pricing issues

• Pricing in Translation Mode

• Pricing for International Marketing Efforts

• Tactical aspects– Bundling– Discounts– …

Price Wars

• Northwest: “Grown-Ups With Kids Fly Free”

• American Airlines: 50% cut for 3 month

• Others matched

• Result: SOLD OUT!

Pricing Techniques

• Yield management

• “Every day low price”

• AA “Value Pricing”

Texas Instrument: Global Pricing

1. What is TI’s current approach to pricing of semiconductors?

2. How is TI organized to manage its current pricing policy? In the US and outside the US?

3. Why is Arrow requesting “global pricing”? What is meant by global pricing?

4. What would be the implications of “Global Pricing”?

Case Questions: Trilogy Corporation

• Please Check the Case Study.

• Questions are at the end of the case.

Real Case, Real PeopleJoe Liemandt

Trilogy’s Vertical Offerings

Trilogy’s Fast Cycle Time Approach

Example of Trilogy’s Business Success Metrics

Comparison of Pricing Approaches

Classification of selected value-based Pricing Mechanism

Comparison of pricing approaches

Thank you!

谢谢！

Waldemar Pfoertsch

Professor Business Marketing

CEIBS

699 Hongfeng Road, Shanghai China