What is price? What is price? • Sum of all the values that consumers exchange for the benefits of having or using the product or service. • Major factor affecting buyer choice • Direct link between the product and profits • Only element in the marketing mix that produces revenues; all others represent costs. • Least sustainable advantage?
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What is price?What is price?• Sum of all the values that consumers exchange for
the benefits of having or using the product or service.
• Major factor affecting buyer choice
• Direct link between the product and profits
• Only element in the marketing mix that produces revenues; all others represent costs.
• Least sustainable advantage?
A well-designed pricing A well-designed pricing mechanism should do the mechanism should do the following:following:
• Discriminate between customers according to market segments (Customers)
• Coordinate incentives across intermediaries and consumers (Collaborators)
• Effectively deal with competition (Competitors)• Integrate with the firm’s other marketing
several products and offering the bundle at a reduced price.
o i.e. amusement park tickets
Segmented PricingSegmented Pricing
Custom er - Segm ent Location Pric ing
Product - Form Tim e Pric ing
S ell ing Products A t D iffe rent Pr ices EvenT hough T here is No D iffe rence in C os t
Psychological Psychological PricingPricing
• Considers the psychology of prices and not simply the economics.
• Customers use price less when they can judge quality of a product.
• Price becomes an important quality signal when customers can’t judge quality; price is used to say something about a product.
Value $22.00Sale $14.99
Promotional pricingPromotional pricing
Special-Event Pricing
Cash Rebates
Low-Interest FinancingLonger Warranties
Free MerchandiseDiscounts
Loss Leaders
Temporarily pricing products
below list price to increase short-
term sales through:
Promotional PricingPromotional Pricing
Discount and Discount and Allowance Allowance
PricingPricing
Cash Discount Seasonal Discount
Quantity Discount T rade-In Allow ance
Functional Discount Prom otional Allow ance
A djus ting Bas ic Price to Rew ard C ustom ersF or C erta in Responses
• Adjusting Prices to Account for the Geographical Location of Customers.• i.e. FOB-Origin, Uniform- Delivery, Zone Pricing, Basing Point, & Freight-Absorption.
• Adjusting Prices for International Markets.• Price Depends on Costs, Consumers, Economic Conditions, Competitive Situations & Other Factors.
Geographical Pricing
International Pricing
Other Price Other Price Adjustment StrategiesAdjustment Strategies