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Marketing Management: The Big Picture by Marta Dapena-Baron, Christie L. Nordhielm

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chapter eleven

PRICING

“That which is easily got is little valued.”

Cervantes, Saavedra, M. de. (1793).

The History and Adventures of the Renowned Don Quixote. 6th ed. corr. London: Printed for A. Law, W. Miller, and R. Cater. Volume 1, page 277.

After studying this chapter you should be able to:

  1. Identify the multidimensional aspects of pricing
  2. Explain how companies commonly set prices
  3. Describe the logic of cost-based pricing
  4. Describe competitive-based pricing
  5. Explain customer value-based pricing
  6. Discuss how to align pricing to the firm strategy
  7. Integrate pricing with other elements of the Big Picture framework

Google's “Free” Pricing Model

image

As of December 2012, Google operated over 1 million servers in data centers around the world, processing billions of search requests per day. Google's services allow us to intelligently search information posted by billions of people around the world, including over a million books and scholarly articles; to view a satellite image of virtually any address anywhere in the world; to organize, store, and share our photos and images with our friends; to talk and view anyone in the world in real-time over the Internet; to translate content in seconds to virtually any language. Google doesn't charge consumers to do any of these things. Yet its market capitalization at the end of 2012 was over $240 billion, making it one of the most valuable ...

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