There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations. Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.Price Skimming:Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost and other marketing strategies and pricing approaches are implemented. E.g. mobilinkPenetration Pricing:The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV. E.g. telenorPsychological Pricing:This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar. Cost-plus pricing:Cost-plus pricing is the simplest pricing method. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price. This method although simple has two flaws; it takes no account of demand and there is no way of determining if potential customers will purchase the product at the calculated price.Price = Cost of Production + Margin of Profit. Loss Leader: Basic Concept In the majority of cases, this pricing strategy is illegal under EU and US Competition rules. No market leader would wish to sell below cost unless this is part of its overall strategy. The idea of selling at a loss may appear to be in the public interest and therefore not often challenged. Only when the leader pushes up prices, it then becomes suspicious.
Transcript of "4 ps vs 7ps"
Anu MishraM.B.A(Finance and Marketing) ,CIA firstname.lastname@example.org
Vs PRESENTED BY : ANU MISHRA MBAPRESENTED BY:ANU MISHRA 2 BU
4ps of Marketing MixCONCEPT BY E.JEROME MC CARTHY PRESENTED BY:ANU MISHRA 3
4ps and 7ps1. Product2. Price PRESENTED BY:ANU MISHRA 4
PROMOTIONAny form of communication abusiness or company uses toinform, persuade, or remindpeople about products and toimprove its image PRESENTED BY:ANU MISHRA 5
4. Place : Place under marketing mix involves allcompany activities that make the productavailable to the targeted customer . 5. 6. 7. PRESENTED BY:ANU MISHRA 6
5.People: The human resources in the organization. The most important asset of the organization.6.Process: This means procedure, mechanism and flow of activities by which a service is acquired .The services includes various process like meeting of customers .7.Physical Evidence: This is the environment when services is delivered and any tangible goods that facilitate the performance and communication of the service. PRESENTED BY:ANU MISHRA 7