Core Concepts of Marketing

246 CHAPTER 9 PRICINGTHEPRODUCT

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MARKETING CAPSULE •

1. Approachestodeterminingpriceinclude:
   a. Cost-plusandmark-ups
   b.Demand-orientedpricing
   c. Value-basedapproachestopricing
   
   
   • Establishhighestpossiblepricelevelandjustifyit withcomparablevalue.
   
   
   • Usepriceasa basisfo~establishing strongcustomerrelationships.4
   
   
   
   

TheFutureofPricing

Fortoolong,pricingdecisionshavebeendominatedbyeconomists,discounters,andfinan-

cialanalysts.Whilemakinga reasonableprofitremainsa necessity,priciJ1gmustbecome

a morestrategicelementofmarketing.Smarterpricing,asportrayedbythevalue-based

strategy,appearstorepresentthefuture.Acaseinpointis theFordMotorCo., whichman-

agedtoearn$7.2billionin2000,morethananyautomakerinhistory.Despitea lossof

marketshare, thekeytotheirsuccesswasa 420,000-unitdecreaseinsalesoflow-margin

vehiclessuchas EscortsandAspires,anda 600,000-unitincreaseinsalesofhigh-margin

vehicles suchasCrownVictoriasandExplorers.Fordcutpricesonitsmostprofitablevehi-

clesenoughtospurdemand, butnotsomuchthattheyceasedto haveattractivemargins.