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THE MARKETING MIX: PRICE (MAIN METHODS OF PRICING (PRICE SKIMMING (Usually…
THE MARKETING MIX: PRICE
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MAIN METHODS OF PRICING
PENETRATION PRICING
Is when the price is set lower than the competitors’ prices in order to be able to enter a new market.
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PRICE SKIMMING
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However, the costs may be too high so there may be less customers.
DYNAMIC PRICING
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When the different groups of people are charged at different costs, such as ages.
It can also be used to reflect the level of demand. If the demand increases then the price will also increase.
MAIN METHODS OF PRICING
PSYCHOLOGICAL PRICING
Psychological pricing is an approach when particular attention is paid to the effect that the price of a product will have upon consumers' perceptions of the product.
Might involve charging a high quality product at a high price so that high income customers wish to purchase it as a symbol.
Another way is to price a product just below a whole number, it gives off an impression of being cheaper.
It ensures that sales are made by reinforcing consumers' perceptions of the product - this may be it brand image when the price is set high.
HOWEVER, THE COMPETITORS MAY DO THE SAME THUS REDUCING THE EFFECT.
MAIN METHODS OF PRICING
COST-PLUS PRICING
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This involves estimating how many products will be produced,and calculating the total cost of producing the product and finally adding a percentage mark-up for profit.
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COMPETITIVE PRICING
Is when the product is priced in line with or just below competitors’ prices to try to capture more of the market.
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In order to decide what this price would be, you have to research your competitiors price as well.
PROMOTIONAL PRICING
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It can help a business when sales are falling, many customers may be interested in it again.
However, the sales revenue will be lower since the price of the products is lower
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