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C12: MARKETING MIX : PRICE, PRICING STRATEGIES - Coggle Diagram
C12: MARKETING MIX : PRICE
ELASTIC VS INELASTIC DEMAND
ELASTIC
CHANGE IN QUANTITY IS GREATER THAN CHANGE IN PRICE
INELASTIC
CHANGE IN QUANTITY IS NOT AS GREAT AS CHANGE IN PRICE
HOW TO MAKE IT MORE INELASTIC?
TAKE OVER COMPETITION (CUSTOMER HV NO CHOICE)
MAKE SMALL CHANGES OVER SHORT PERIOD OF TIME
MAKE PRODUCT UNIQUE
FACTORS AFFECTING DEMAND
CHANGE IN CONSUMER INCOME
ADVERTISING
CHANGES IN TASTE / PREFERENCES
CHOOSING PRICING METHODS
IS THE PRODUCT UNIQUE?
IS IT A NEW / EXISTING PRODUCT?
IS COMPETITION FIERCE IN THE MARKET?
DOES THE BUSINESS HAVE WELL KNOWN BRAND IMAGE?
WHAT ARE THE COSTS OF MAKING & SUPPLYING THE PRODUCT?
WHAT ARE THE BUSINESS OBJECTIVES?
PRICING STRATEGIES
PENETRATION PRICING
ADVANTAGES
ENSURE SALES ARE MADE
INCREASE MARKET SHARE QUICKLY
DISADVANTAGES
POSSIBLE LOSS OF REVENUE
CANNOT COVER DEVELOPMENT COST QUICKLY
PRICE LOWER THAN COMPETITORS
(USED TO ENTER NEW MARKET)
COST - PLUS PRICING
ADVANTAGES
ENSURE COST IS COVERED
DISADVANTAGES
IF PRICE TOO HIGH THAN RIVAL PRICE, MAY LOSE SALES
COVER COSTS & ENSURE CERTAIN PROFIT IS MADE
PRICE SKIMMING
ADVANTAGES
HELP ESTABLISH GOOD PRODUCT QUALITY
DISADVANTAGES
MAY PUT OFF POTENTIAL CUSTOMER BECAUSE OF HIGH PRICE
HIGH PRICE SET FOR NEW PRODUCT
(UNIQUE PRODUCT)
COMPETITIVE PRICING
ADVANTAGES
MAINTAIN MARKET SHARE
PRICES SIMILAR - COMPETE ON QUALITY OF PRODUCT & CUSTOMER SERVICE
DISADVANTAGES
RESEARCH COMPETITORS CONSTANTLY TO SET PRICE
BUSINESS ALREADY HAS GOOD BRAND IMAGE & LOYAL CUSTOMERS (PRICE IN LINE WITH COMPETITOR)
PROMOTIONAL PRICING
ADVANTAGES
CREATE BRAND AWARENESS
USEFUL FOR GETTING RID OF UNWANTED INVENTORY B4 IT GOES OUT OF DATE
ATTRACT CUSTOMER
INTO RETAIL
DISADVANTAGES
SALES REVENUE LOWER (CUZ OF LOW PRICE)