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
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')
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