PROF JAYASHREE VISPUTE
Price
 The only marketing mix element that produces
revenue
 Most flexible element of marketing mix
 Charging too much ...
Internal Factors
Pricing
Decisions
External Factors
Factors to consider when setting prices
INTERNAL FACTORS
 Marketing objectives of the firm
 The image sought by the firm through pricing
 The characteristics o...
External Factors
 Market chracteristics –
demand, customers, competition
 Price elasticity of demand of the product
 Co...
Marketing
Objectives
Marketing-Mix
Strategy
Costs
Organizational
Considerations
Internal Factors Affecting Pricing
Decisio...
Nature of Market
And Demand
Competition
Government Policies
Other: Economy,
Resellers etc.
External Factors Affecting Pric...
Marketing
Objectives
Survival
Low Prices to Cover Variable Costs and
Some Fixed Costs to Stay in Business.
Current Profit ...
Total Costs
Sum of the Fixed and Variable Costs for a Given
Level of Production
Fixed Costs
(Overhead)
Costs that don’t
va...
Marketing-Mix
Strategy
Product Design
Distribution
Promotion
Non-Price
Factors
Companies Will Consider Price Along With Al...
Costs set lower limits
Market and demand set upper limits
Marketers must understand the
relationship between
price and dem...
Who sets prices
Organizational Considerations That Effect Pricing Decisions
Costs set lower limits
Market and demand set upper limits
Marketers must understand the
relationship between
price and dem...
Price
Quantity Demanded per Period
A. Inelastic Demand -
Demand Hardly Changes With
a Small Change in Price.
P2
P1
Q1Q2
Pr...
Competitors’ prices and their
possible reactions need to be
considered when setting prices
Competition
Pricing Objectives
A firm may choose any of the following:
1. Maximize current profits & ROI
2. Exploit competitive positi...
Price versus Non price Competition
- A company engages in price competition by regularly offering
products priced as low a...
Price versus Non price Competition
- In non price competition, sellers maintain stable prices and
attempt to improve their...
 Setting the price
1. Setting the Pricing Objective
2.Determining Demand
3.Estimating costs
4.Analyzing competitor’s cost...
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Transcript of "Price"

  1. 1. PROF JAYASHREE VISPUTE
  2. 2. Price  The only marketing mix element that produces revenue  Most flexible element of marketing mix  Charging too much chases away potential customers, charging too little cuts revenue  Price is dynamic because of environmental influences  Price is the amount of money charged for a good or service
  3. 3. Internal Factors Pricing Decisions External Factors Factors to consider when setting prices
  4. 4. INTERNAL FACTORS  Marketing objectives of the firm  The image sought by the firm through pricing  The characteristics of the product  The stage of the product in the life cycle  Cost of manufacturing and marketing  Extend of differentiation and distinctiveness of the product  Other elements of the product mix
  5. 5. External Factors  Market chracteristics – demand, customers, competition  Price elasticity of demand of the product  Competitors pricing strategies  Government controls/regulations on the price  Relevant legal aspects  Societal views
  6. 6. Marketing Objectives Marketing-Mix Strategy Costs Organizational Considerations Internal Factors Affecting Pricing Decisions
  7. 7. Nature of Market And Demand Competition Government Policies Other: Economy, Resellers etc. External Factors Affecting Pricing Decisions
  8. 8. Marketing Objectives Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business. Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Cash Flow or ROI. Market Share Leadership Low as Possible Prices to Become the Market Share Leader. Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business. Product Quality Leadership High Prices to Cover Higher Quality Marketing Objectives that Affect Pricing Decisions
  9. 9. Total Costs Sum of the Fixed and Variable Costs for a Given Level of Production Fixed Costs (Overhead) Costs that don’t vary with sales or production levels. Executive Salaries Rent Variable Costs Costs that do vary directly with the level of production. Raw materials Types of Cost Factors that Effect Pricing Decisions
  10. 10. Marketing-Mix Strategy Product Design Distribution Promotion Non-Price Factors Companies Will Consider Price Along With All the Other Marketing-Mix Elements When Developing the Marketing Program. Price Must be Coordinated With: Marketing Mix Variables that Affect Pricing Decisions
  11. 11. Costs set lower limits Market and demand set upper limits Marketers must understand the relationship between price and demand for a product Market and Demand Factors that Affect Pricing Decisions
  12. 12. Who sets prices Organizational Considerations That Effect Pricing Decisions
  13. 13. Costs set lower limits Market and demand set upper limits Marketers must understand the relationship between price and demand for a product Market and Demand Factors that Affect Pricing Decisions
  14. 14. Price Quantity Demanded per Period A. Inelastic Demand - Demand Hardly Changes With a Small Change in Price. P2 P1 Q1Q2 Price Quantity Demanded per Period P’2 P’1 Q1Q2 B. Elastic Demand - Demand Changes Greatly With a Small Change in Price. Price Elasticity of Demand
  15. 15. Competitors’ prices and their possible reactions need to be considered when setting prices Competition
  16. 16. Pricing Objectives A firm may choose any of the following: 1. Maximize current profits & ROI 2. Exploit competitive position 3. Survival in a competitive market 4. Balance price over product line.
  17. 17. Price versus Non price Competition - A company engages in price competition by regularly offering products priced as low as possible and typically accompanied by few, if any, services - Price competition can often be found in the retail sector - But: A low price should not be the only competitive advantage! Price Competition
  18. 18. Price versus Non price Competition - In non price competition, sellers maintain stable prices and attempt to improve their market positions by emphasizing other aspects of their marketing programs - In non price competition, the emphasis is on something other than price! - The best approach in non price competition is to build strong brand equity Non price Competition
  19. 19.  Setting the price 1. Setting the Pricing Objective 2.Determining Demand 3.Estimating costs 4.Analyzing competitor’s costs, prices and offers 5.Selecting a pricing method 6.Selecting the final price
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