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Marketing Dynamics Pricing1

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Marketing Dynamics Pricing1

  1. 1. Pricing: its role and influencing factors Ike-Elechi Ogba
  2. 2. Lecture objective <ul><li>To understand the concept of pricing, its role and influencing factors </li></ul>
  3. 3. What is price? <ul><li>The amount of money paid for a product, or the agreed value placed on the exchange by a buyer and seller, (Jobber, 2004). </li></ul><ul><li>A medium of exchange; what is offered in return for something else; usually measured in terms of money, Brassington and Pettitt, 2003, p. 1106). </li></ul>
  4. 4. What is price (cont.)? <ul><li>The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service, Kotler et al 2005, p. 665). </li></ul>
  5. 5. The role of Price in Marketing <ul><li>Role of price/pricing depends on the perspective: </li></ul><ul><li>Customers perspective: </li></ul><ul><li>Value perspective: financial/investment, </li></ul><ul><li>Functional perspective: performance related, e.g.: washing machine. </li></ul><ul><li>Quality perspective: e.g.: hand made Belgium chocolate, BMW. </li></ul><ul><li>Personal benefits perspective: social class or ego attached to market offering (product/services) by the customer: Property in “Kensington” London and “Gateshead” Northeast. </li></ul>
  6. 6. The role of Pricing (cont.) <ul><li>Sellers perspective: </li></ul><ul><li>Source for generating revenue </li></ul><ul><li>Cost recovery strategy </li></ul><ul><li>Profit making (profit=total revenue-total cost) </li></ul><ul><li>Tool for effective competition </li></ul><ul><li>Market penetration tool/instrument </li></ul><ul><li>Tool for classification of market offering: e.g., high priced product=high quality. </li></ul><ul><li>But be careful. </li></ul>
  7. 7. Factors influencing Pricing <ul><li>Internal factors: </li></ul><ul><li>Organisations Marketing objectives </li></ul><ul><li>Organisations marketing-Mix strategy </li></ul><ul><li>Costs (production, administrative, other organisational costs) </li></ul><ul><li>Organisational price choice. </li></ul>
  8. 8. Factors influencing Pricing (cont.) <ul><li>External factors </li></ul><ul><li>Market demand and supply </li></ul><ul><li>Nature and structure of market: pure competition, monopolistic, oligopolistic markets. </li></ul><ul><li>Competitors price and market offerings </li></ul><ul><li>Other macro-environmental factors: STEP </li></ul>

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