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the marketing mix - pricing (factors that effect pricing decisions…
the marketing mix - pricing
types of pricing
cost based
full/total cost approach
how many units
at what price
to cover costs
break even analysis
total revenue
total cost
sales
cost
break even point
increased cost at increased sales
cost pricing
marginal cost pricing
second market discounting
lower price if lower capacity
eg rooms in a hotel
cost plus pricing
adding a % for profit
mark up
competitor based
in relation
to competition
similar price
going rate pricing
comparison
customer value
the offering
competitor strength
pricing strategies
competitive bidding
price in relation to assumed competitor pricing
customer based
setting the price on customer value
demand pricing
professed willingness to buy
at various prices
good value pricing
fair price
based on quality against price
value added pricing
adding
features
services
to increase value
differentiates from competitors
psychological based
emotional response
prestige pricing
signal quality
odd/even pricing
lower price perception
factors that effect pricing decisions
negotiating margins
product line pricing
political factors
explicability
price-quality relationships
channel member effects
channel member expectations
costs
competition
value perceptions
organisational objectives
pricing objectives
marketing strategy
buyers price perceptions
legal and regulatory
marketing objectives
marketing mix
who sets prices
market demand
the economy
social concerns
macro
micro
STEEPLE
product mix pricing
product line pricing
different products
in a range
level of value
eg car makes
optional product pricing
accessories
optional products
captive product pricing
associated products
needed for use
eg ink cartridges for printers
by product pricing
offsetting costs
products used in production
eg grains from beer for marmite, feed etc
product bundle pricing
related products sold together
eg meal deals
cheaper than if purchased seperately
pricing in business markets
economic value to the customer (EVC)
concerned with
saving costs
increasing revenue
discounts offered
trade/functional
offered by a producer
for a particular function
storage
transportation
credit
processing
selling
quantity
buying in large quantities
one off or cumulative
reduce discounters costs
cash
encourage
cash payments
payments in a short time period
seasonal
buying out of season
allowances
for related actions by the buyer
help the allowance giver
approaches for informing pricing decisions
general survey
simplest approach
segment feedback
limited insights
price sensitivity analysis
assess changes in price sensitivity
ask customer questions
plot on price map
can identify to low or to high
conjoint analysis
customers make a series of choices
useful with new products
artificiality limits usefullness
elasticity modelling
rarely used
assess customer sensitivity to price changes
experimentation
test customers perceptions
ethical considerations
dynamic pricing
assessing
needs
characteristics
buyers
adjusting price offered
segmented pricing
different pricing
product
service
based on
differences in customers
product
location
eg student and senior citizen discount
super sized pricing
greater quantity
lower price
can have negative implications