2. • Price decisions considered one of the most important decisions in marketing
department. Everybody knows that price is of direct effect on organizations'
profits. From this side comes the importance of pricing for any marketing
program. Determine prices are not an easy process, as somebody thinks, because
there are many factors that have an impact on pricing process.
3. .
Cost, competition, demand magnitude in the market, buying capability
and other factors have a direct impact on determine price process beside
price impact on revenues, returns and on decisions of distributions and
promotions.
Determine prices strategy is part of long terms strategies that is risky and
sensitive because it has a direct impact on goals achievement of the
organization and all other marketing activities.
4. • The one, who produces, sells and buys has to determine the price for
the objectives:
1-Cover the overall expenses
2-Meet (achieve) the planned returns, revenues and profits.
3-Meet (achieve) the planned sales
4-Increase the product value from customer point of view
5-Express quality of the product
5. Determine Price Strategy Steps
1-Choose / select pricing objectives
• As explained before, there are many objectives and a certain object must be
selected among them. General speaking the objectives related to sales must be
concerned which are increase of sales or reserve market share. In addition, the
objectives related to profit, competition and its great value. After that, objectives
related to the social responsibility towards markets the organization exists.
6. 2-Determine targeted markets, evaluate the price and buying capability for these
markets
• The price is the major factor for the buyer and it is related to item type or service
type and market nature.
• For that when determining the targeted markets a knowledge and a study for
buying capability must be available or done by sensitivity for prices concerning
buyers.
7. • 3-Determine Demand (Order)
• Determine the demand (order) means the expected sales volume in this market
or number of item units or services that can be sold during a determined period.
The demand type must be known. Demand types are:
• A Flexible demand: It is a demand when the price increases the demand
decreases in large amounts. The administration has to rind if the presented item
of this type or not.
• Un Flexible demand: It is a demand when the price increases the demand is not
much effected. This is only for unique items that have no competitors. The
administration has to find is the item of this type or not.
8. • 4-Estimate costs, demand, Profits and the internal relation between them
• The cost factor is one of the bases to determine prices beside the demand factor.
The cost represents the minimum price that an item, product, or service can be
sold.
9. 5-Evaluate competitors prices:
• This step is a mandatory to be done. It begins by the organization with studying
pricing methods followed by competitors and try to investigate about the
products they are presenting, its prices and compare them with its products and
prices of the candidate (potential) products and their prices that are going to
enter the market by the organization. The following are the three methods that
are followed
10. • A-To price the products with higher prices than competitor’s price and in this
case, the products must have advantage or privilege on the competitive products.
• B-To price the products with lower prices than competitors' prices and this
applied when competitive products are better, somehow, than the products of
the organization.
• C-To price the products with same prices of the competitors and this applied
when competitive products similar in properties and characteristics of the
organization products
11. Types of Pricing (Pricing) Strategies
• 1-Product Pricing Strategy according to competition prices
• 2- Pricing Strategy according to cost plus profit
• 3- Marketing Skimming Strategy
Less price sensitive than others
Aware of product value better than others
Able to pay high price
The organization, in this case, will apply the following:
-Apply and confirm high prices
-Provide products of high quality
-Less sales with high profits.
12. 4-Market Penetration Strategy
When the demand is flexible
When the size of the market is big
Cost reduction is possible
5-Promotion Pricing Strategy
-Price Event Pricing
-Special Event Pricing