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Price (Selection of a pricing strategy (Product-line pricing
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Price
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Stages for establishing prices
1) Development of pricing objectives
goals that describe what a company wants to achieve through pricing
- form the basis of decisions for other stages
- be explicitly stated and include a time frame
- be consistent with the marketing objectives
2) Assessment of target market's evaluation of price
- the importance of price depends on the type of product, the type of target market and the purchase situation
- price depends on the perception of value, which is a combination of price and quality attributes
3) Evaluation of competitors' prices
- in competitive situations, marketers must keep prices the same as, or lower than
- in some instances, an organisation's prices are designed to be slightly above competitors to give product an exclusive image
4) Selection of a basis for pricing
cost-based pricing - adding a dollar amount or percentage to the cost of the product
- cost-plus pricing: adding a specific dollar amount or percentage to the seller's cost
- markup pricing: adding to the cost of the product a predetermined percentage of that cost
value-based pricing- based on the level of benefits offered by the products
competition-based pricing - influenced primarily by competitor's prices
5) Selection of a pricing strategy
6) Determination of a specific price
- use of systematic approach when establishing final price
- consider environmental forces and marketer's understanding
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How does it relate to revenue
Types of pricing objectives
increase market share- set the price lower compared to competing brands
- temporary price reductions
raise cash quickly
- temporary price reductions
Customer perceptions of the product
value conscious - concerned about price and quality of a product
price conscious - striving to pay low prices
prestige sensitive - drawn to products that signify prominence and status