4 P's

1. The Marketing Mix

2. Price

3. Marketing Mix
Price
Amount a customer will pay; perception of a product’s
value
Selling price is made up of:
● Costs of Goods Sold (COGS)
● Desired profit (or profit margin)
Influenced by:
● Expenses
● Supply/Demand
● Brand
● Competition
Product
Price
Promotion
Place
Target
Market

4. Pricing Strategies

5. • Increase profits
• Attract new customers
• Maintain current customers
• Increase profit per customer
• Introduce new product
• Generate cash
• Improve Return On Investment

6. Price
• Pricing Strategy
• Importance of:
• knowing the market
• elasticity
• keeping an eye
on rivals

7. Price
The price of a product will depend on:
• The cost to make it
• The amount of profit desired
• The price competitors charge
• The objectives of the business
• The price customers are willing to pay
• Is there a high demand?
• Is demand sensitive to changes in price?

11. Pricing strategies and tactics
Skimming Launching with a high price when there is little
competition, then reducing the price later. Often used
with technology.
Penetration A low price is charged initially to penetrate the market
and build brand loyalty. The price is then increased
e.g. introductory offers on magazines.
Competitive A similar price is charged to that of competitors’
products.
Loss leader Products may be sold at a price lower than the cost to
produce it. Often used by supermarkets to encourage
people into the store where it is hoped they will buy
other products.

12. Pricing strategies and tactics
Psychological A price is set which customers perceive as lower
than it is e.g. $39.99 instead of $40.
Differential Different prices are charged for the same product
e.g. bus fares for children are cheaper than adult
prices.
Cost plus pricing An additional ‘mark-up’ is added to the cost of
producing a good or service.
Strategic pricing Price is set to position an exclusive product or
brand to make it more desirable for consumers,
generate demand or demonstrate value

13. Pricing strategies change as the product
passes through its life cycle
•PREMIUM STRATEGY
• Producing a high-quality product
and charging the highest price
•ECONOMY STRATEGY
•Producing a lower quality product but charging
a low price
Rolex vs Timex watches

14. • GOOD VALUE STRATEGY
•“We have high quality, but at a lower
price”
•OVERCHARGING STRATEGY
•Company overprices its product
in relation to its quality
•GM uses combination of strategies, offering
various automobiles
Hummer – Cadillac - Pontiac
Marriott – Courtyard Marriott – Residence Inn

15. P/Q Higher Price Lower Price
Higher
Quality
Premium Strategy Good Value
Strategy
Lower
Quality Overcharging
Strategy Economy
Strategy
Pricing Strategies for New
Products