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Pricing Strategies

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Pricing Strategies

  1. 1. Marketing Mix Price
  2. 2. Objectives     Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of products. Analyse the appropriateness of different pricing strategies in a given business.
  3. 3. What are the 4Ps of the Marketing Mix?
  4. 4. Components of the Marketing Mix Product Place Marketing Mix Price Promotion
  5. 5. How is the Marketing Mix Used?     Understand the needs and wants of customers (Kolter 2002). Used by businesses to decide how and where to market a product. A small business may just hand out leaflets. A large business will look at each of the 8Ps in detail.
  6. 6. The 4ps must be balanced Marketing Strategy Integrated Marketing Mix Product Place Price Promotion
  7. 7. Different Marketing Mix for Different Situations Type of Purchasing  Are goods: Most Important element of mix regular purchases  Impulse purchases Regular Purchases Product, promotion and  Emergency purchases price  chocolate brands focus on place and Impulse Purchases Place, and promotion promotion. (including packaging)  Emergency Purchases Place and product
  8. 8. Influences on the Marketing Mix  Finance  Technology  Research  Consumer
  9. 9. Where does the Marketing Mix fit into Planning? Analyse the market Develop Strategies Develop Marketing Mix
  10. 10. Write down the 4Ps on your post-it note
  11. 11. Quiz The biggest influence on the marketing mix is? A. B. C. Finance Consumers Technology Which is a member of the 4 Ps ? A. B. C. People Place Public Relations The marketing mix is the fundamental aspect of marketing? True False
  12. 12. Quiz If I was a small business, which promotion method would I be likely to use? A. B. C. National advertising between mainstream TV programs Online through Facebook National newspaper Marketing excites me. True False
  13. 13. Objectives     Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of products. Analyse the appropriateness of different pricing strategies in a given business.
  14. 14. Importance of Price – Business Revenue  Revenue = price x units sold  If the price isn't right businesses could:  Lose customers  Lose revenue
  15. 15. Reason for pricing strategies     To break into a new market. To try and increase market share. Increase profit. To make sure all costs are covered.
  16. 16. Pricing Strategies  Types of Pricing Strategy:  Cost plus Pricing.  Penetration Pricing.  Price Skimming.  Competitive Pricing.  Promotional Pricing.  Loss Leader.
  17. 17. Cost Plus Pricing      A company will look at how much a product will cost to produce. Then add a percentage mark-up profit (money added on top to make a profit). Easy to apply. Always covers costs. If competitor is selling at a cheaper price could lose sales.
  18. 18. Penetration Pricing    This would possibly be used when trying to enter a new market. Price is set lower than your competitors. Customers will try your product and become regular customers.
  19. 19. Price Skimming    Product is usually a new one and therefore can be sold on the market at a higher price. Establish the product being of high quality. May put off some customers who can’t afford it.
  20. 20. Competitive Pricing     Pricing in line with your competitor’s price or just below. Sales are likely to be high because your price is not over or under priced. Requires research which costs money. Can end in a pricing war with competitors.
  21. 21. Promotional Pricing     Promotional pricing is pricing the product low for a set amount of time. Useful for getting rid of unwanted stock. Renew interest in the business if sales are falling. However, can affect business revenues.
  22. 22. Loss Leader     Aim to capture a large share of the market by charging a low price (below cost). Short-term the firm will make a loss. However, it will capture a large market share. Longer term will raise the selling price of the product and make profits.
  23. 23. Missing line task       Market Penetration - Charging a low price to gain market share. Price skimming - Pricing high to maximise profit margins. Cost plus - Adding a % of profit onto direct costs. Loss Leader - Selling a product at below its cost. Competitive - Charge above or below competitors Promotional - Low price for a small period of time.
  24. 24. The price is right  Eight scenarios, which pricing strategy would you use and why?
  25. 25. Objectives     Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of products. Analyse the appropriateness of different pricing strategies in a given business.
  26. 26. Case study - Homework   Read case on ASDA and £3 jeans. Answer questions, 1-3. This is due in for Thurday
  27. 27. Objectives     Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of products. Analyse the appropriateness of different pricing strategies in a given business.

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