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Marketing
Management
Pricing
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Class Plan
The Second P- Pricing
Pricing options and
strategies
Exam Talk
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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
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Factors to Consider WhenSetting Prices
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Factors to Consider WhenSetting Prices
Other I nternal and External Consideration
Affecting Price Decisions
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Customer Perception of Value
General Pricing
Approaches
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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
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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
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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
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New Product Pricing
strategies
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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.
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Product Mix Pricing Strategies
