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The marketing mix- pricing (factors that affect pricing decisions (economy…
The marketing mix- pricing
types of pricing
competitor- based prcing
when comparing against competition (Kotler et al 2016) ask 3 questions:
how strong are current competitors?
what are competitors current pricing strategies?
how does companys market offering compare with competitors? customer value
competitive bidding
Pricing is set in relation to competitors. company may choose a similar price to competitors
customer-based pricing
market oriented pricing
set price of product on its value to customers
customer-value-based
types of customer based pricing
Demand pricing
set price based on customers willingness to buy a product or service at various price options
Good value pricing
fair price based on a balance of quality against price
value-added pricing
add features or services to increase value of offering to customers
differentiates from competitors, enabling a higher price
psychological based pricing
emotional response
prestige pricing to signal quality
odd-even pricing- 7.99 instead of 8 lower price perceptions
cost-based pricing
total cost approach used to work out how any units need to be sold at different price levels to cover the full cost
costs: direct, variable,fixed or overheads, marketing
Break even analysis
worth while offering the product
cost-plus pricing
add % for profit to a cost of a product
mark-up pricing
used by retailers to set a price by adding a mark up to the price they paid for their product to obtain profit.
factors that affect pricing decisions
economy
social concerns
market demand
who sets the prices in firm
buyers price perception, legal issues, marketing mix and objectives
org objectives, pricing
price quality relations, channel member effects plus expectations
negotiating margins, product line pricing, political factors, explicability
marketing strategy
costs, competition, value perceptions
product mix pricing
captive-product
associated product needed to use the principle product- ink for printers
By-product
find a way to sell by-products from principle products production
allows principle products cost to be set compettively
offset cost of principle product
Optional-product
offer accessories along side principle product
Product-bundle
sell set of related products in a bundle at a price lower than if individually purchased
supermarkets- meal deal, snack and drink
Product line
price different products in a range based on value each offers to buyers
Pricing in business markets
companies offer a variety of discounts
cash
encourage cash payments within a short time period
seasonal
offered for buying out of season
quantity
discounts for buying large quantities
allowances
price reductions for related actions by the buyer that help the allowance granter to achieve their goals.
trade or functional
discount offered by a producer for a function such as storage
5 approaches for informing pricing decisions
conjoint analysis
elasticity modelling
van westendorp survey, price sensitivity analysis
Experimentation
general survey
Ethical considerations
super-sized pricing
used to entice customers to purchase a larger quantity at a lower price
excess food, health goals wastage
segmented pricing
charge different prices for a product based on diff in consumers, product and locations
Price discrimination
dynamic pricing
involves assessing buyers needs and adjusting the price accordingly