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The Marketing Mix: Price (Main Methods of Pricing (Promotional Pricing…
The Marketing Mix: Price
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Main Methods of Pricing
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Competitive Pricing
Definition: When the product is priced in line with or just below competitors' prices to try to capture more of the market
Sales are likely to be high as your price is at a realistic level and the product is not under- or over-priced
In order to decide what this price should be, you would have to research what price your competitors are charging, and this costs time and money
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Psychological Pricing
Definition: An approach when particular attention is paid to the effect that the price of a product will have upon customers' perceptions of the product
High-quality product involves charging a very high price will encourage high income customers to purchase it as a status symbol
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It ensures that sales are made by reinforcing consumers' perceptions of the product - this may be its brand image when the price is set high
Penetration Pricing
Definition: When the price is set lower than the competitors' prices in order to be able to enter a new market
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Dynamic Pricing
Happens when customers are split into two or more groups and they are charged different prices for basically the same product/service because they have different demand levels
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Effects
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Ensuring all seats are filled e.g. airlines, football game
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