Pricing The final element. Price Represents the value of a good or service for both the seller and...
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Transcript of Pricing The final element. Price Represents the value of a good or service for both the seller and...
Price
Represents the value of a good or service for both the seller and the buyer
It describes all forms of purchase, both monetary and non-monetary
Importance
Part of the exchange Deregulation Forms are more cost-conscious Global economy= greater interest in
currency valuations and exchange rates
In slow economies it is hard to raise prices
Relationship to other marketing elements
Prices vary over product life cycle Affects customer service Competitive with other firms, yet
profitable Sales force may need flexibility As costs change, prices or other
features may need to change
Factors affecting price Demand Costs Government regulations (FTC)
Price fixing Price discrimination Unfair sales acts Unit pricing Price advertising
Channel members Competition
Broad price policy
Sets the overall direction and tone for a firm’s pricing efforts and makes sure pricing decisions are coordinated with the firm’s choices as to a target market, an image, and other marketing mix factors
Demand-based pricing
A firm sets prices after studying consumer desires and prices acceptable to the target market Demand-minus pricing Chain markup pricing Price discrimination
Competition-based pricing
Using competitors’ pricing rather than demand or cost considerations as primary pricing guideposts Price above Price below Meet competition
Price leadership
Considerations in implementing a price strategy
Customary vs. variable pricing One price vs. flexible pricing Odd pricing Price-quality association Leader pricing Multiple unit pricing Price lining Price bundling Geographic pricing Purchase terms Price adjustments
Customary vs. variable pricing
Customary pricing a firm sets prices and seeks to maintain them for an extended period of time
Variable pricing- lets a firm intentionally lower or raise prices in response to cost fluctuations or differences in consumer demand
One price policy vs. flexible pricing
One-price policy - lets a firm charge the same price to all customers seeking to purchase a good or service under similar conditions
Flexible pricing – a firm sets prices based on the consumer’s ability to negotiate or the buying power of a large customer
Price-quality association
Consumer may believe high prices represent high quality and low prices represent low quality Prestige pricing
Multiple-unit pricing
A firm offers discount to customers to encourage them to buy in quantity, as to encourage overall sales volume
Price lining
Involves selling products within a range of prices, with each representing a distinct level of quality or features Benefits Constraints
Geographic pricing
FOB mill or factory FOB destination Uniform delivered Zone pricing Base-point pricing