Hospitality Marketing
LINGAER
PricingLecture.pptxPricing: Science or Art?
Michael McCall, Ph.D
NAMA Professor For Hospitality Business
Michigan State University
&
Center for Hospitality Research
Cornell University
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
PRICING
Pricing is the moment of truth! All of marketing comes into focus in the pricing decision.
- Raymond Corey, Harvard Business School (1966)
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Why Study Pricing
Communicates Identity
Communicates Strategic Focus
Direct Link to the Bottom Line
Can Promote Long-term Relationships (CLTV)
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
What Does Price Mean?
Common Answers
Value
Quality
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
The Equation
If Price = Quality
What Happens if I Lower Price?
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Common Approaches to Pricing
Cost-based Pricing
Product Cost Price Value Customer
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Common Approaches to Pricing
Demand-based Pricing
Revenue Based Management
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Common Approaches to Pricing
Competition-based Pricing
Loss of control
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Common Approaches to Pricing
Value-based Pricing
Customer Value Price Cost Product
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Value Proposition Exercise
Value Proposition Customer
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Customer Value Math – more than one choice
Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Copyright © 2006, SAS Institute Inc. All rights reserved.
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Key Takeaway
It’s All About Value!
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Factors That Impact Perceptions of Value
Switching Costs Effect
Price-Quality Effect
End Benefit Effect
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
Factors That Impact Perceptions of Value
Perceived Substitutes Effect
Unique Value Effect
Difficult Comparison Effect
Shared Costs
Expenditure Effect
Inventory/Scarcity effect
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
KEY OBJECTIVE
PRICING IS A STRATEGIC TOOL
QUESTIONS
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Executive Path to Hospitality Leadership Through Learning
The Professional Development Program
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