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The Marketing Mix : Price (Main Methods of Pricing (Cost Plus Pricing…

- - - - estimating how many will be produced
      - calculating total cost or production
      - each product earns a different profit for the business
    - - business could lose sales
      - total profit will only be made if sufficient units is sold
      - no incentive to reduce costs
  - - - sales are likely to be high
      - avoids price competition
      - often used when it is difficult for consumers to differentiate between other businesses
    - - if cost of production is higher then competitive pricing could lead to losses
      - a higher quality product might need to be sold at a higher price point
      - detailed research would be needed - costs time and money
  - - - often used for newly launched products > impact
      - ensure that sales are made and products enters new market successfully
      - market share could be build up quickly
    - - sold at a low price >> profit per unit may be low
      - customers might 'get used' to low prices >> decline if business raises price
      - might not be appropriate for branded product with reputation for quality
  - - - get rid of unwanted inventory (doesn't sell)
      - help renew interest
    - - low revenue
      - might lead to price competition