2. Pricing
• This is the only element in the marketing mix
that brings in the revenues. All the rest are
costs.
• Price communicates the value positioning of
the product.
• Price = Cost + Profit
3. Factors influencing pricing
• Cost
• Objectives
• Demand
• Competition
• Distribution channel
• Government
• Economic condition
• Ethical consideration
• Types of buyers
• Product differentiation
20. Pricing Policy
• “ A pricing policy is a guiding philosophy or
course of action designed to influence and
determine pricing decisions.”
• Once the company has decided on a pricing
policy, it must then choose a pricing method.
• “ A pricing method is a mechanical procedure
for setting prices on a regular basis.”
22. Cost Orientated Pricing
• This is where the price of a product or service
is calculated and a margin applied to derive a
selling price
• This is the simplest method of pricing and is
often used by companies for calculating
prices.
• It has the disadvantage of not taking into
account the economic aspects of supply and
demand and often does not relate to pricing
objectives
23. Demand Orientated Pricing
• This method allows for high prices when the
demand is high and lower prices when the
demand is low, regardless of the cost of the
product or services.
• Demand orientated pricing allows a firm to
make higher profits as long as the buyers
value the products above the cost price.
24. Competition Orientated Pricing
• The firm fixes the prices of the products and
services in relation to the competitor’s prices.
• This has the advantage of giving the firm the
opportunity to increase sales or market share.
