SBA Week 7-9

• Pricing Methods and Strategies


  Methods and approaches used by businesses to set the prices of their products or services
• Pricing Strategies


  Methods and approaches used by businesses to set the prices of their products or services
• Factors to consider when developing a pricing strategy

  • Target Market
  • Product or Service
  • Competition
  • Business Goals
• Benefits of a well-defined pricing strategy

  • Increased Profitability
  • Enhanced Customer Value
  • Competitive Advantage
  • Improved Sales and Revenue
• Tips for choosing the right pricing strategy

  • Analyze your business goals and target market
  • Consider your product or service and its unique value proposition
  • Evaluate your production costs and desired profit margin
  • Research your competitors' pricing strategies
  • Test different pricing approaches and track the results
• Most common pricing strategies

  • Market Penetration
  • Price Skimming
  • Economy Pricing
  • Competitive Pricing
  • Discount Pricing
  • Psychological Pricing
  • Bundled Pricing
  • Cost Plus Pricing
  • Dynamic Pricing
  • Prestige/Premium Pricing
  • Value Based Pricing
• Market Penetration


  Involves setting lower prices to enter a market and gain a foothold quickly, often targeting price-sensitive customers and aiming to capture market share. Once a company has attracted customers via penetration pricing, it often changes strategy to create brand loyalty, convert customers into long-term consumers, and drive competitors out of the market.
• Market Penetration Participants


  • New Companies
  • Established brands offering new products
• Price Skimming


  Setting high initial prices for a new product or service to capitalize on early adopters or those willing to pay a premium, then gradually reducing prices to reach broader market segments.
• Economy Pricing


  Offering products or services at low prices to attract cost-conscious consumers, often by maintaining low overhead and focusing on efficiency.
• Competitive Pricing


  Setting prices based on competitors' prices, aiming to either match, undercut, or slightly exceed them to remain competitive in the market.
• Ways to approach competitive pricing

  • Above competition pricing
  • Below the market pricing
  • Same price pricing
• Discount Pricing


  Offering temporary or permanent price reductions to stimulate sales, attract customers, or clear out excess inventory.
• Ways to Structure a Discount

  • Above Percentage Discounts - 20% off
  • Fixed Amount Discounts - ₱30 off
  • BOGO Deals - B1T1
• Psychological Pricing


  Employing pricing tactics to influence consumers' perceptions and behavior, such as setting prices just below a round number (e.g. 399 instead of 400) to make them appear more attractive.
• Bundled Pricing


  Offering multiple products or services together for a single price, often at a discounted rate compared to purchasing each item separately.
• Cost Plus Pricing


  Determining the selling price by adding a markup to the cost of producing or acquiring a product or service.
• Dynamic Pricing


  Adjusting prices in real-time based on various factors such as demand, competition, time of purchase, or customer demographics.
• Prestige/Premium Pricing


  Setting higher prices to convey luxury, exclusivity, or superior quality, often targeting affluent customers willing to pay for perceived value.
• Value Based Pricing


  Setting prices based on the perceived value of the product or service to the customer, considering factors such as benefits, features, and customer preferences rather than just production costs or competitors' prices.
• Tomas del Rosario College is located at Capitol Drive, San Jose, Balanga City
• Tomas del Rosario College's Telefax No: [phone]
• Tomas del Rosario College's email addresses are [e-mail] and [e-mail]
• This study material is for WEEK 7: FINANCIAL ANALYSIS IN PRODUCT PORTFOLIO ANALYSIS
• The students are AMBROCIO, GUILA CHARITY P., ARANAS, VIA NICOLE D., BARTOLOME, JUSTINE MAE D., PALITAYAN, JOVELE L., RAMOS, LUISITO JR. I., and SACRIZ, ELOISA MARIE C. from BSA 4A
• Financial Analysis


  The process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability
• Main purpose of financial analysis

  To check the effectiveness of funds employed in the firm by analyzing the efficiency of operations and financing activities using a data-backed approach
• Parties conducting financial analysis


  • External (investors, shareholders, government agencies, credit agencies)
  • Internal (management of the entity through their accounting and finance departments)
• Objective of financial analysis

  To obtain the desired information for the decision-makers about the business entity
• Financial statement analysis helps to examine the past performance of the organization under the financial lens
• Broad objective of financial analysis

  To determine the profitability potential and financial position of the firm
• Financial analysis


  Used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment
• Common way to analyze financial data

  Calculate ratios from the data in the financial statements to compare against those of other companies or against the company's own historical performance
• Types of financial analysis

  • Vertical analysis
  • Horizontal analysis
  • Growth rate analysis
  • Profitability analysis
  • Liquidity Analysis
  • Efficiency Analysis
  • Leverage
  • Cash flow analysis
• Vertical analysis


  A method of financial statement analysis in which each line items is listed as a percentage of a base figure within the statement
• Horizontal analysis


  Used to evaluate an organization's performance over time by comparing prior period financial results with more current financial results
• Growth rate analysis


  Involves collecting data from multiple years with the purpose of finding actionable insights, including year over year analysis, regression analysis, bottom-up analysis, and top-down analysis
• Types of profitability ratios

  • Margin ratios (gross profit margin, operating profit margin, net profit margin)
  • Return ratios (return on assets, return on equity, return on invested capital)
• Liquidity analysis


  Aimed to find out the potential of the entity to meet its short term liabilities and financial needs
• Common liquidity ratios


  • Current ratio
  • Quick ratio
  • Cash ratio