Pricing Strategy (PowerPoint PPT Slide Deck)

PRICING STRATEGY PPT DESCRIPTION

This product (Pricing Strategy) is a 38-slide PPT PowerPoint presentation slide deck (PPT) with a supplemental Excel document, which you can download immediately upon purchase.

Read Marcus Overview

Explore Slides inside the Deck:

Strategic Pricing Approaches: Skimming vs. Penetration Framework for Developing Pricing Sensitivity Metrics Mapping Pricing Elasticity Scores to Factors

Pricing Strategy is a core pillar of Marketing and Product Strategy. It is 1 of the 4 Ps of Marketing (also known as the Marketing Mix – Product, Price, Placement, and Promotion). As such, knowing how to properly price your product is extremely important to the commercial success and viability of your product offering.

This Pricing Strategy presentation (PowerPoint) provides an in-depth framework on Pricing Strategy; and is organized into the following sections:

1. Pricing Strategy
Price Skimming vs. Penetration Pricing
Consumer Adoption Curve
Advantages and Disadvantages

2. Pricing Approach
Data Collection
Price Curve Analysis

3. Price Sensitivity Analysis
Analysis Approach
Price Sensitivity Financial Model

4. Pricing Tactics and Terminology

Pricing should be an informed, strategic decision based on data, not a decision made randomly or based on trial-and-error. This Pricing Strategy in Marketing PPT teaches you a framework to do Pricing correctly. In fact, this Pricing Strategy framework is the same developed and used by global strategy consulting firms when conducting Pricing Strategy projects for their clients.

Formulating the optimal Pricing Strategy involves considering and answering critical pricing questions, such as:

•  What is the price point to maximize profit?
•  What is the price point to maximize share?
•  What is the price point to capture the Early Market?

Pricing Strategy begins with a decision—to skim or to penetrate the market. Price skimming involves introducing the new product or service at a relatively high price point. Then, with time, as competition increase, the price is dropped. Penetration pricing involves introducing a product or service at a low initial entry price point, often lower than existing competing products in the market.

We have several slides explaining the concepts of Price Skimming (and Market Skimmer) vs. Penetration Pricing (and Market Penetrator), under the backdrop of the Consumer Adoption Curve (and with specific consideration for "crossing the chasm").

This Pricing Strategy PPT also presents a 3-phase approach to Pricing:

1. Data Collection – Pricing data is often difficult to gather. Therefore, pricing data may come from a variety of sources.

2. Analysis & Insights – With the gathered pricing data, the next step is to make sense of the numbers. It is critical to document and be rational with any assumptions made.

3. Pricing – The final phase involves setting the final price point.

Within this Pricing presentation PowerPoint, there is also a detailed discussion of a 5-phase approach to Price Sensitivity Analysis. Price sensitivity is a measurement of how much the price of the product or service affects customers' willingness to buy the offering. This analysis highlights the 9 drivers to Price Sensitivity (e.g. Reference Price Point, Switching Cost Effect, Expenditure Effect, Fairness Effect, Framing Effect, etc.), Pricing Elasticity Analysis, and the Point of Perfect Elasticity.

A supporting Price Sensitivity Financial Model built in Excel is also included with this purchase.

As this is a fully editable PowerPoint presentation, you can also adapt the slides as templates for your own presentations on Pricing Strategy. The various PowerPoint diagrams (e.g. Consumer Adoption Curve, Price Curve Analysis) can be leveraged for your own Pricing presentations.

Additional Pricing tactics discussed include Loss Leader Pricing, Psychological Pricing, Price Discrimination, Predatory Pricing, Cost-Plus Pricing, among others.

This presentation provides a comprehensive analysis of the Price Sensitivity Financial Model, illustrating how to derive and apply pricing sensitivity formulas. It also includes detailed examples of various pricing tactics such as Psychological Pricing and Price Discrimination, offering practical insights for real-world application.

MARCUS OVERVIEW

This synopsis was written by Marcus [?] based on the analysis of the full 38-slide presentation.

Executive Summary
The Pricing Strategy Toolkit is a comprehensive resource designed for corporate executives and consultants seeking to master pricing strategies. Developed by former consultants from top firms, this toolkit provides a McKinsey, Bain, or BCG-quality framework (consulting-grade; not affiliated) for understanding and implementing effective pricing strategies. Users will learn to navigate key concepts such as skimming vs. penetration pricing, the consumer adoption curve, price sensitivity analysis, and various pricing tactics. This toolkit empowers decision-makers to optimize pricing strategies, enhance market share, and maximize profitability.

Who This Is For and When to Use
•  Marketing executives responsible for pricing strategy formulation
•  Product managers launching new products into competitive markets
•  Business analysts conducting market research and pricing analysis
•  Consultants advising clients on pricing strategy and market entry
•  Financial analysts assessing pricing impact on revenue and profitability

Best-fit moments to use this toolkit:
•  When launching a new product and determining initial pricing strategy
•  During market analysis to understand competitive pricing dynamics
•  In strategic planning sessions focused on revenue optimization
•  When conducting financial modeling for pricing sensitivity scenarios

Learning Objectives
•  Define the differences between skimming and penetration pricing strategies
•  Analyze the consumer adoption curve to identify optimal pricing points
•  Build a pricing sensitivity financial model to assess revenue impacts
•  Establish effective pricing tactics based on market research and data analysis
•  Create actionable insights from price curve analysis to maximize profits
•  Evaluate advantages and disadvantages of various pricing strategies

Table of Contents
•  Pricing Strategy (page 3)
•  Skimming vs. Penetration (page 4)
•  Consumer Adoption Curve (page 5)
•  Advantages and Disadvantages (page 8)
•  Pricing Approach (page 10)
•  Data Collection (page 12)
•  Price Curve Analysis (page 14)
•  Price Sensitivity Analysis (page 18)
•  Analysis Approach (page 19)
•  Price Sensitivity Financial Model (page 25)
•  Pricing Tactics and Terminology (page 28)

Primary Topics Covered
•  Pricing Strategy - An overview of pricing strategies, focusing on skimming versus penetration approaches to market entry.
•  Consumer Adoption Curve - A framework illustrating how different consumer segments adopt products over time, influencing pricing decisions.
•  Pricing Approach - A structured method for gathering data and analyzing pricing strategies to inform decision-making.
•  Price Sensitivity Analysis - Techniques for assessing how changes in price affect consumer demand and overall revenue.
•  Price Curve Analysis - Visual representations of the relationship between price, revenue, and market share to identify optimal pricing points.
•  Pricing Tactics and Terminology - A glossary of essential pricing tactics and terms relevant to pricing strategy formulation.

Deliverables, Templates, and Tools
•  Pricing sensitivity financial model template for analyzing price elasticity
•  Consumer adoption curve framework for visualizing market penetration
•  Price curve analysis charts to illustrate revenue and profit relationships
•  Data collection templates for gathering competitive pricing intelligence
•  Pricing strategy decision matrix for evaluating skimming vs. penetration
•  Pricing tactics glossary to ensure consistent terminology across teams

Slide Highlights
•  Visual representation of the consumer adoption curve, highlighting key market segments
•  Comparative analysis of skimming vs. penetration pricing strategies with pros and cons
•  Graphical depiction of price sensitivity analysis and its impact on revenue
•  Detailed pricing curve analysis showcasing revenue and profit peaks
•  Interactive pricing sensitivity financial model embedded for real-time analysis

Potential Workshop Agenda
Pricing Strategy Overview Session (60 minutes)
•  Introduce key concepts of pricing strategy
•  Discuss skimming vs. penetration pricing with case studies
•  Explore the consumer adoption curve and its implications

Data Collection and Analysis Workshop (90 minutes)
•  Review methods for gathering pricing data
•  Conduct hands-on price curve analysis using real-world examples
•  Develop pricing sensitivity models based on collected data

Pricing Tactics and Implementation Session (60 minutes)
•  Discuss various pricing tactics and their applications
•  Create actionable plans for implementing pricing strategies
•  Evaluate potential challenges and solutions in pricing execution

Customization Guidance
•  Tailor the pricing sensitivity financial model to reflect specific market conditions
•  Adjust the consumer adoption curve framework to align with product categories
•  Modify pricing tactics terminology to fit organizational language and culture

Secondary Topics Covered
•  Value pricing and its relevance in luxury markets
•  Loss leader pricing strategies for driving ancillary sales
•  Psychological pricing effects on consumer perception
•  Price discrimination tactics across different market segments
•  Predatory pricing implications and legal considerations

FAQ
What is the difference between skimming and penetration pricing?
Skimming involves setting a high initial price to maximize margins from early adopters, while penetration pricing sets a low price to quickly capture market share.

How can I assess price sensitivity for my products?
Utilize the pricing sensitivity financial model included in the toolkit to analyze how price changes impact demand and revenue.

What is the consumer adoption curve?
The consumer adoption curve illustrates the stages through which consumers progress when adopting a new product, including innovators, early adopters, early majority, late majority, and laggards.

What are some common pricing tactics?
Common tactics include value pricing, loss leader pricing, psychological pricing, and price discrimination.

How do I determine the optimal price point for my product?
Conduct a price curve analysis to visualize the relationship between price, revenue, and market share, identifying the price point that maximizes profit.

Can this toolkit be customized for specific industries?
Yes, the toolkit provides guidance on how to tailor frameworks and models to fit specific market conditions and industry requirements.

What resources are included in the toolkit?
The toolkit includes templates, models, and charts for pricing analysis, along with a glossary of pricing terminology.

How do I implement the pricing strategies outlined in the toolkit?
Use the workshop agenda provided to facilitate discussions and planning sessions focused on pricing strategy implementation.

Glossary
•  Price Skimming - Setting a high initial price to maximize margins from early adopters.
•  Penetration Pricing - Introducing a product at a low price to quickly gain market share.
•  Consumer Adoption Curve - A model illustrating the stages of consumer acceptance of new products.
•  Price Sensitivity - The degree to which demand for a product changes in response to price changes.
•  Pricing Tactics - Strategies used to set prices based on market conditions and consumer behavior.
•  Value Pricing - Setting prices based on perceived value to the customer.
•  Loss Leader Pricing - Pricing a product below cost to drive sales of related products.
•  Psychological Pricing - Pricing strategies that consider the psychological impact on consumers.
•  Price Discrimination - Charging different prices for the same product in different markets.
•  Predatory Pricing - Setting prices low to eliminate competition.
•  Cost-Plus Pricing - Setting prices by adding a markup to the cost of production.
•  Marginal Cost Pricing - Pricing based on the incremental cost of producing one additional unit.
•  Absorption Pricing - Sharing fixed costs across multiple products sold.
•  Going Rate Pricing - Setting prices based on competitors' pricing.
•  Tender Pricing - Pricing based on formal bids submitted for contracts.
•  Expenditure Effect - The relationship between the price of a product and the buyer's overall budget.
•  Fairness Effect - Buyers' sensitivity to prices perceived as unfair.
•  Switching Costs Effect - The impact of costs incurred when changing suppliers on price sensitivity.
•  Reference Price Effect - The influence of perceived alternatives on price sensitivity.

PRICING STRATEGY PPT SLIDES

Strategic Pricing Approaches: Skimming vs. Penetration

This slide compares two foundational pricing strategies: price skimming and penetration pricing. Price skimming involves launching a product at a high initial price point to maximize margins from early adopters, then gradually lowering the price as competition increases — a technique often called riding down the demand curve. Penetration pricing takes the opposite approach, entering the market at a low price point to rapidly capture market share and sales volume by targeting price-sensitive customers. The choice between these strategies directly shapes market positioning, profit margins, and long-term competitive dynamics.

Framework for Developing Pricing Sensitivity Metrics

This slide outlines a framework for determining pricing strategy based on price sensitivity. Key metrics include Total Possible Score (15), Lowest Possible Score (5), Price Elasticity Score (13), Elasticity Factor Upper Bound (150%), Point of Perfect Elasticity (12), and Threshold of No Elasticity (5.50%). The Calculated Elasticity Factor is 117%, quantifying price sensitivity. Users can modify assumptions in designated cells, allowing for tailored pricing strategies that adapt to market conditions and business objectives. These metrics are essential for informed pricing decisions aligned with overall business strategy.

Mapping Pricing Elasticity Scores to Factors

This slide outlines the process for determining the Point of Perfect Elasticity and mapping a pricing elasticity score to an elasticity factor. The scoring system ranges from 4 to 12, with a score of 12 corresponding to an elasticity factor of 190%, indicating strong price sensitivity. The Point of Perfect Elasticity is defined as 100%, where a percentage change in price results in an equivalent percentage change in units sold. Establishing 3 key anchor points—upper bound, mid-point, and lower bound—tailors pricing strategies based on brand strength. The remaining elasticity factor values derive from these anchor points, creating a structured framework for assessing pricing strategies and their impact on demand.

Understanding the Consumer Adoption Curve for Pricing Strategy

The Consumer Adoption Curve categorizes customers into 5 segments: Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), Late Majority (34%), and Laggards (16%). Innovators are technology enthusiasts who embrace new products, while Early Adopters are visionaries advocating for revolutionary changes, bridging the gap to broader market acceptance, often referred to as “The Chasm.” The Early Majority consists of pragmatists who adopt proven solutions, essential for substantial market penetration. The Late Majority is conservative and price-sensitive, requiring simple, functional products. Laggards are critical of innovations and need strategies focused on their specific needs. Understanding these segments is vital for optimizing pricing strategies and product positioning in the market.

Strategic Framework for Optimal Pricing Decisions

This slide outlines a structured approach to pricing strategy, divided into 3 sections: Data Collection, Analysis & Insights, and Pricing. The Data Collection section addresses challenges in gathering pricing data from diverse sources, including customer surveys, market research reports, historical sales data, and competitive intelligence. The Analysis & Insights phase emphasizes rational documentation of assumptions and visual representation of data to interpret trends and relationships between price and revenue. The final section, Pricing, focuses on setting the price point by addressing 3 key questions: maximizing profit, maximizing market share, and capturing early market segments. This structured approach mitigates pricing risks and enhances market positioning.

Pricing Dynamics: Insights on Market Share and Profitability

This slide tabulates pricing data, illustrating the relationship between unit price, market share, customer volume, margin, revenue, and profit. At a price of $340, market share is maximized at 100%,, but profitability is compromised due to a negative margin. As prices increase, market share decreases while margins and revenue fluctuate. For example, at $1,300, the margin is 23%, generating a profit of approximately $12.75 million. The data indicates limits to market share capture without sacrificing profitability, highlighting the need for a balanced pricing strategy. Understanding these dynamics is essential for aligning pricing with market conditions and profitability objectives.

Source: Best Practices in Pricing Strategy, Product Strategy, Product Launch Strategy PowerPoint Slides: Pricing Strategy PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting