05 POM-BBA

7/30/2019 05 POM-BBA

1/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

Marketing

Management

Pricing

7/30/2019 05 POM-BBA

2/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 2

Class Plan

The Second P- Pricing

Pricing options and

strategies

Exam Talk

7/30/2019 05 POM-BBA

3/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 3

What Is a Price?

Price

is the amount of money charged for a product orservice. It is the sum of all the values that consumersgive up in order to gain the benefits of having orusing a product or service.

Price is the only element in the marketing mix thatproduces revenue; all other elements representcosts

7/30/2019 05 POM-BBA

4/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 4

Factors to Consider WhenSetting Prices

7/30/2019 05 POM-BBA

5/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 5

Factors to Consider WhenSetting Prices

Other I nternal and External Consideration

Affecting Price Decisions

7/30/2019 05 POM-BBA

6/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 6

Customer Perception of Value

General Pricing

Approaches

7/30/2019 05 POM-BBA

7/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 7

General Pricing

Approaches

Cost-based Pricing involves setting prices

based on the costs for producing,

distributing, and selling the product plus a

fair rate of return for its effort and risk.

Cost-based pricingadds a standard markup to

the cost of the product

7/30/2019 05 POM-BBA

8/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 8

Another Approach

Break-even pricing is the price when total costs

are equal to total revenue and there is no profit

Target profit pricing is the price at which the firmwill break even and make the profit its seeking

General PricingApproaches

7/30/2019 05 POM-BBA

9/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 9

Value Based PricingSetting Price

Based on buyers perceptions of value

rather than on the sellers cost. Competition-Based PricingSetting

Price Based on prices that competitors

charge for similar products

General Pricing

Approaches

7/30/2019 05 POM-BBA

10/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 10

New Product Pricing

strategies

7/30/2019 05 POM-BBA

11/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail.com 11

Premium Pricing.

Use a high price where there is a uniqueness about the

product or service. This approach is used where a asubstantial competitive advantage exists.

Penetration Pricing.

The price charged for products and services is setartificially low in order to gain market share. Once

this is achieved, the price is increased. Economy Pricing.

This is a no frills low price. The cost of marketing andmanufacture are kept at a minimum.

Price Skimming. Charge a high price because you have a substantial

competitive advantage. However, the advantage is notsustainable.

7/30/2019 05 POM-BBA

12/12

Long termprofitableCustomer

Relationships

Marketing efforts

Customerunderstan

ding

faheemazam@gmail com 12

Product Mix Pricing Strategies