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Pricing (Factors influence price (Operational (B2B product's ability…
Pricing
Factors influence price
Operational
B2B product's ability to affect production process
B2C operational efficiency microwave
Financial
B2B as investment whether increase efficiency
Quality
ex hand-made chocolate VS. mass production (labour involvement)(basis of company image)
Personal
psychological benefits (status)
Functional
ability to fulfil expectation
scarcity/ level of emergency
External influence
Channels of distrbution
add to cost (warehouse)
Competitors
Monopoly
keep price socially acceptable limit
Oligopoliy
choose a price close to each other
Monopolist competition
different price from competitor
perfect competition
little flexible on price decide by market
Demand and price elasticity
Demand
Price elasticity of demand
Responsiveness of demand to change in price
Legal
control price by decide who should or not sell their prodcuts
include duty or tax as part of pricing
Customers and consumer
Competitve standing (strong brand loyalty push upper limit higher)
Setting process
3 Pricing policies/ strategies
new product
skimming (high first)
good: a quality brand, and can gain learning experience through small market (luxury goods)
risk: quality not match with price cause bad reputation (easier to reduce price)
penetration
good: reduce competitor, useful in elastic demand situation
risk: poor quality brand, hard to raise price
low price gain large market share
product mix
basic priced product with added extras (add price) in product line
risk: what to include in basic price, competitor may have all-inclusive price
4 setting the price range
cost based
focus on organisation's production and marketing cost, lack of external analysis
cost-plus
hard to estimated cost first, add fixed % to production or construction cost
experience curve
predict how cost change over when more efficient, get high market share early in product's life
mark-up
hard to estimate demand pattern for each product line, retail add a percentage on supplier price(8% to 200%)
demand based
demand up, price up
ex. package holiday during easter is high
psychological pricing (buy one get one free)
competition based
product's perceived value
more differentiated product, more control on price
structure of market
more competitor, less control of price
competitor analysis (general overview, production line)
2 Demand assessment
assess the likely levels of demand for a product at any given price
5 pricing tactics
discount
Allowance (trade in old car)
geographical adjustment (postage fee)
1 Pricing objectives
link to organisational and marketing objectives
financial objective
long term: profit maximizations, ROI, shareholder
short term: main cashflow
sales & marketing objectives
market share and positioning
maintenance of market share (price not increased)
status quo (happy for things to continue)
use price matching (competitive price in some products, set up premium price in others)
increasing market share (low price)
Volume sales (pile up stocks until sold, but may have pressure to sell at discount)
risk: price war
Internal influence
Marketing objectives
focus on specific target markets
consider product lifecycle
Costs
short term
unpredictable environment (lower price in some seasons for hotels)
what consumer prepare to pay
fixed cost (electricity)
varaible cost (laundry in hotel)
joint/shared cost divided between some products produced by one organisation (maintenance)
Organisational objectives
organisation relative position compare with competition
target volume/value sales, trade growth in segments, target profit
Definition
measure in money as medium of exchange
Seller's perspective
Profit=total revenue-total cost (only marketing mix generate revenue)
competitive pressure keep margin tight
pure economic (low price increase sales)
higher price might attract customers