Reading 9: The marketing mix - pricing

1 Types of pricing

2 Factors that affect pricing decisions

3 Product mix pricing

4 Pricing in business markets

Competitor-based pricing

Customer-based pricing

Cost-based pricing

Direct costs

Variable costs

Production, distribution and marketing

Overheads

Method

Break-even analysis

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Direct cost pricing / Marginal cost pricing (Jobber and Ellis-Chadwick, 2013)

Taking account of the increase of costs as sales are ascending

Mainly used in service offerings where capacity is usually dismissed

Hotels

Threatres

Resturants

RSC (Royal Shakespeare Company)

Mercure

Waga Mama's

'May offer lower prices to cover direct costs than have vacancies at higher prices that cover the costs.

Comparing against competitors FAQ's (Kotler and Armstrong (2016, p. 332))

'How does a company's market offering compare with competitors' offerings in terms of customer value?'

'How strong are competitors?'

What are their [competitors'] current pricing strategies

Demand pricing

Good-value pricing

Value-added pricing

Phycological-based pricing

Cost

Competition

Value perceptions

Objectives

Organisational

Marketing

Pricing objective

Pricing

1/4 of the 'Traditional Marketing Mix' ('4Ps').

1/7 adjoined with the 'Extended Marketing Mix' ('7Ps')

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macro and micro environments

'STEEPLE factors'

Effects of price influences

Pricing decision bodies (Kotler and Armstrong, 2016).

Management

Divisional

Product

Sales

Production

Finance managers / accountants

Product line pricing

Optional-product pricing

Captive-product pricing

By-product pricing

Product bundle pricing

Trade or functional discounts

Quantity discounts

Cash discounts

Seasonal discounts

Allowances

5 Approaches for information pricing decisions

General survey

Van Westerndorp survey / price sensitivity analysis

Conjoint analysis

Elasticity modelling

Experimentation ((Kotler and Armstrong (2016))

6 Ethical considerations

Dynamic pricing

Segmented pricing

Supersized pricing