Internal factors that affect pricing decisions include marketing objectives, marketing mix strategy, costs of production, organizational considerations, and the product life cycle stage. Pricing must be coordinated with other elements of the marketing mix like product, promotion, and distribution. Management must also consider costs of production, who sets prices within the organization, and how pricing strategies vary depending on whether a product is in the introduction, growth, maturity, or decline stage of its life cycle.
MARKET BASED AND COMPETITOR BASEDB PRICINGmahesh patil
This document provides an overview of market-based pricing and competitor-based pricing. It defines market-based pricing as establishing a price based on existing market conditions, including customer perceived value, psychological price barriers, and going rate pricing. It then defines competitor-based pricing as strategies based on a firm's position relative to competition, including maintaining prices at par with competitors (premium, discount, and tender pricing). The document serves as a presentation on these pricing strategies for an MBA department.
1. Pricing is determining the monetary value of a product for consumers and involves considering objectives like maximizing profits, competitive pricing, and market factors.
2. Key factors that influence pricing decisions include costs, demand, competition, product differentiation, and the product's stage in its lifecycle.
3. Common pricing methods include cost-based pricing, demand-based pricing, and competition-based pricing which sets prices relative to competitors. Pricing strategies also involve options like penetrating the market with low introductory prices or skimming customers by charging high initial prices.
The document discusses various pricing strategies and concepts. It compares strategies like skimming pricing, penetration pricing, and competitive pricing. It also describes how prices are quoted, such as list prices and discounts. Finally, it discusses pricing policies, relationships between price and quality, global pricing strategies, and characteristics of online pricing like cannibalization and bundle pricing.
This document outlines various pricing strategies and concepts for products. It discusses new product pricing strategies like market skimming and market penetration pricing. It also covers product mix pricing strategies that take into account different products and bundles. Additionally, it outlines various price adjustment strategies including discounts, segmented pricing, and geographical pricing. Finally, it discusses factors around initiating price changes and responding to competitors' price changes, as well as public policy considerations related to pricing.
The document discusses pricing decisions and advertising. It covers the meaning of pricing, objectives of pricing like market penetration and skimming. Factors influencing pricing like costs, competition and economic conditions are examined. Methods of pricing such as cost-plus, target-profit and going-rate pricing are outlined. Advertising is defined and its characteristics like being paid communication and exposing prospects to messages are explained. Various advertising mediums like newspapers, magazines, radio, television and direct mail are also described.
When selecting a final price, companies should consider factors like other marketing activities, pricing policies, how the price will impact customers and other businesses, and gain-and-risk-sharing pricing. High quality brands that also spend heavily on advertising can often charge premium prices. Companies also need to avoid alienating customers with stealth price increases and should establish a pricing department and forecasting system to help set prices.
Internal factors that affect pricing decisions include marketing objectives, marketing mix strategy, costs of production, organizational considerations, and the product life cycle stage. Pricing must be coordinated with other elements of the marketing mix like product, promotion, and distribution. Management must also consider costs of production, who sets prices within the organization, and how pricing strategies vary depending on whether a product is in the introduction, growth, maturity, or decline stage of its life cycle.
MARKET BASED AND COMPETITOR BASEDB PRICINGmahesh patil
This document provides an overview of market-based pricing and competitor-based pricing. It defines market-based pricing as establishing a price based on existing market conditions, including customer perceived value, psychological price barriers, and going rate pricing. It then defines competitor-based pricing as strategies based on a firm's position relative to competition, including maintaining prices at par with competitors (premium, discount, and tender pricing). The document serves as a presentation on these pricing strategies for an MBA department.
1. Pricing is determining the monetary value of a product for consumers and involves considering objectives like maximizing profits, competitive pricing, and market factors.
2. Key factors that influence pricing decisions include costs, demand, competition, product differentiation, and the product's stage in its lifecycle.
3. Common pricing methods include cost-based pricing, demand-based pricing, and competition-based pricing which sets prices relative to competitors. Pricing strategies also involve options like penetrating the market with low introductory prices or skimming customers by charging high initial prices.
The document discusses various pricing strategies and concepts. It compares strategies like skimming pricing, penetration pricing, and competitive pricing. It also describes how prices are quoted, such as list prices and discounts. Finally, it discusses pricing policies, relationships between price and quality, global pricing strategies, and characteristics of online pricing like cannibalization and bundle pricing.
This document outlines various pricing strategies and concepts for products. It discusses new product pricing strategies like market skimming and market penetration pricing. It also covers product mix pricing strategies that take into account different products and bundles. Additionally, it outlines various price adjustment strategies including discounts, segmented pricing, and geographical pricing. Finally, it discusses factors around initiating price changes and responding to competitors' price changes, as well as public policy considerations related to pricing.
The document discusses pricing decisions and advertising. It covers the meaning of pricing, objectives of pricing like market penetration and skimming. Factors influencing pricing like costs, competition and economic conditions are examined. Methods of pricing such as cost-plus, target-profit and going-rate pricing are outlined. Advertising is defined and its characteristics like being paid communication and exposing prospects to messages are explained. Various advertising mediums like newspapers, magazines, radio, television and direct mail are also described.
When selecting a final price, companies should consider factors like other marketing activities, pricing policies, how the price will impact customers and other businesses, and gain-and-risk-sharing pricing. High quality brands that also spend heavily on advertising can often charge premium prices. Companies also need to avoid alienating customers with stealth price increases and should establish a pricing department and forecasting system to help set prices.
This document discusses pricing decisions and strategies for companies. It outlines 6 steps in setting prices: 1) selecting a pricing objective, 2) determining demand, 3) estimating costs, 4) analyzing competitors' prices, 5) selecting a pricing method, and 6) selecting the final price. It describes various pricing methods like markup pricing, target-return pricing, and perceived-value pricing. It also discusses ways to adapt prices through discounts, promotions, and differentiated pricing strategies.
This document outlines the six steps involved in setting a price for products and services: 1) selecting the pricing objective, 2) determining demand, 3) estimating costs, 4) analyzing competitors' costs, prices and offers, 5) selecting a pricing method, and 6) selecting the final price. It discusses factors like demand sensitivity, cost structure, competitors' prices, and customer perceptions that inform each step of the process. The overall goal is to establish a price that maximizes profits or other objectives, based on an analysis of market factors.
How should a company set prices initially for products or servicesSameer Mathur
Kartik Bhargava outlines 6 steps for setting a product price: 1) Select a pricing objective such as maximum profit or market share. 2) Determine demand through analyzing price sensitivity, demand curves, and price elasticity. 3) Estimate costs such as production costs and target costs. 4) Analyze competitors' prices, costs, and offers. 5) Select a pricing method such as cost-plus or competitive based pricing. 6) Select the final price considering other marketing activities, company policies, and price impacts on other parties.
The document discusses factors to consider when setting prices, including customer perceptions of value, company and product costs, and other internal and external considerations. It explains that price is determined by balancing how much value customers see in a product and the costs associated with producing it. Pricing strategies discussed include value-based pricing, cost-based pricing, everyday low pricing, and competitor-based pricing. The document emphasizes understanding customer demand and considering factors like price elasticity, competition, and organizational influences when determining price.
This document discusses various pricing strategies that companies can employ. It begins by defining pricing and pricing strategies. The objectives of pricing strategies are then outlined, including earning profits, increasing sales volume, maintaining a competitive edge, and creating a good company image. Several specific pricing strategies are then described in detail: penetration pricing, price skimming, competitive pricing, product line pricing, psychological pricing, premium pricing, optional pricing, bundle pricing, cost-based pricing, and cost-plus pricing. For each strategy, the document provides 1-3 points about how the strategy works and its objectives.
The document discusses various pricing strategies and considerations for business marketing. It covers factors that influence pricing decisions like objectives, demand analysis, costs, competitors, and regulations. It also describes different pricing methods such as cost-based, value-based, and competition-based pricing. Pricing strategies over the product lifecycle and for new products are also examined, along with concepts like discounts, break-even analysis, and leasing.
The document outlines 6 steps in setting price: 1) select the price objective, 2) determine demand, 3) estimate costs, 4) analyze competitor price mix, 5) select pricing method, and 6) select final price. Examples are provided for each step and pricing concepts are explained with diagrams and stories. The document aims to teach marketing concepts through illustrations and real-world examples from the author's blog.
This document discusses various pricing techniques businesses can use to set product prices, including cost-based pricing, demand-based pricing, competition-based pricing, and affordability-based pricing. It also identifies key internal factors like marketing objectives and costs, and external factors like elasticity of demand, government regulation, and customer expectations that affect pricing decisions.
This document discusses pricing strategies and factors that affect pricing decisions. It begins by defining price and explaining that pricing is an important business decision. It then outlines various objectives of pricing, internal factors like costs and product differentiation, and external factors like competition and demand. The document also explains different pricing strategies such as penetration pricing, premium pricing, bundle pricing, and dynamic pricing. It concludes that setting objectives is important for determining appropriate pricing strategies.
This document discusses pricing strategies. It defines price and examines factors that influence pricing decisions, like objectives and costs. It also outlines three major pricing strategies: skimming, penetration, and cost-plus. Skimming aims for early adopters while penetration targets market share. Cost-plus marks up costs. The document also explores tactics like odd-even pricing and discounts, as well as using the product life cycle and elasticity of demand to inform pricing over time.
The document discusses various pricing strategies that businesses can employ. Long-term strategies include charging high prices for premium brands to boost image or lowering prices to increase sales volume for price-elastic products. Short-term strategies include initially charging high prices (skimming) for new products, lowering prices to gain market share quickly (penetration pricing), lowering prices to destroy competition (destroyer pricing), temporarily lowering prices to boost sales (promotional pricing), and varying prices based on demand (demand-oriented pricing).
Price is the amount charged for a product or service. Pricing is affected by internal factors like marketing objectives and costs, and external factors like demand, competition, and economic conditions. Internally, companies must consider objectives like profit, market share, or quality leadership to determine price. Costs like materials and overhead also influence pricing. Externally, companies analyze demand curves, competitor pricing, and macroeconomic trends to set competitive prices. The type of market structure, from perfect competition to monopoly, also impacts pricing power.
This document discusses product mix and product lines. It defines a product mix as the set of all products offered for sale and explains how analyzing product mix dimensions can help businesses expand. It also discusses how product line analysis can help companies develop platforms to meet customer needs while lowering production costs. Key aspects of product line analysis are product length lines, which are influenced by company objectives, and product mix pricing, which involves finding a price mix that maximizes total profits.
The document discusses various pricing strategies and considerations including psychological pricing, cost-based pricing, competitor-based pricing, and promotional pricing. It also covers pricing objectives, factors that influence pricing decisions, and common problems in setting prices. Examples and case studies are provided to illustrate pricing concepts along with references for further reading.
The document discusses factors that influence pricing decisions for businesses. It identifies several key determinants of price, including marketing objectives, competition, costs, product type, and market characteristics. Different pricing strategies are also outlined, such as cost-based pricing, competitive pricing, negotiated pricing, and discount pricing. The document provides examples of how these factors and strategies would impact pricing in different market environments and industries.
The document summarizes key concepts from two sections of Chapter 26 on pricing strategies. Section 26.1 discusses establishing a base price using cost-oriented, demand-oriented, or competition-oriented policies. It also addresses pricing over a product's life cycle. Section 26.2 outlines strategies for adjusting prices, including product mix, geographical, psychological, promotional, and discount pricing. It also details the six steps involved in determining prices.
This following presentation defines Pricing Strategy; A Cost-Based Price Strategy, price set up by calculate production cost, promotion cost, and overhead cost, then adding the desired profit to those calculation. A Demand-Based Price Strategy, price set up after analyzing consumer desires and determines the range of prices acceptable to the target market. A Competition-Based Price Strategy, the marketer sets prices in accordance with competitors.
The document discusses pricing strategies and factors to consider when setting prices. It covers internal factors like costs of production and external factors like competition and economic conditions. The major pricing strategies discussed are customer value-based pricing, cost-based pricing, and competition-based pricing. It also discusses strategies for new products, products within a mix, and adjusting prices for different customers. The objectives of pricing are to ensure business survival, improve profitability, and increase sales and market share.
This document discusses pricing decisions and strategies for companies. It outlines 6 steps in setting prices: 1) selecting a pricing objective, 2) determining demand, 3) estimating costs, 4) analyzing competitors' prices, 5) selecting a pricing method, and 6) selecting the final price. It describes various pricing methods like markup pricing, target-return pricing, and perceived-value pricing. It also discusses ways to adapt prices through discounts, promotions, and differentiated pricing strategies.
This document outlines the six steps involved in setting a price for products and services: 1) selecting the pricing objective, 2) determining demand, 3) estimating costs, 4) analyzing competitors' costs, prices and offers, 5) selecting a pricing method, and 6) selecting the final price. It discusses factors like demand sensitivity, cost structure, competitors' prices, and customer perceptions that inform each step of the process. The overall goal is to establish a price that maximizes profits or other objectives, based on an analysis of market factors.
How should a company set prices initially for products or servicesSameer Mathur
Kartik Bhargava outlines 6 steps for setting a product price: 1) Select a pricing objective such as maximum profit or market share. 2) Determine demand through analyzing price sensitivity, demand curves, and price elasticity. 3) Estimate costs such as production costs and target costs. 4) Analyze competitors' prices, costs, and offers. 5) Select a pricing method such as cost-plus or competitive based pricing. 6) Select the final price considering other marketing activities, company policies, and price impacts on other parties.
The document discusses factors to consider when setting prices, including customer perceptions of value, company and product costs, and other internal and external considerations. It explains that price is determined by balancing how much value customers see in a product and the costs associated with producing it. Pricing strategies discussed include value-based pricing, cost-based pricing, everyday low pricing, and competitor-based pricing. The document emphasizes understanding customer demand and considering factors like price elasticity, competition, and organizational influences when determining price.
This document discusses various pricing strategies that companies can employ. It begins by defining pricing and pricing strategies. The objectives of pricing strategies are then outlined, including earning profits, increasing sales volume, maintaining a competitive edge, and creating a good company image. Several specific pricing strategies are then described in detail: penetration pricing, price skimming, competitive pricing, product line pricing, psychological pricing, premium pricing, optional pricing, bundle pricing, cost-based pricing, and cost-plus pricing. For each strategy, the document provides 1-3 points about how the strategy works and its objectives.
The document discusses various pricing strategies and considerations for business marketing. It covers factors that influence pricing decisions like objectives, demand analysis, costs, competitors, and regulations. It also describes different pricing methods such as cost-based, value-based, and competition-based pricing. Pricing strategies over the product lifecycle and for new products are also examined, along with concepts like discounts, break-even analysis, and leasing.
The document outlines 6 steps in setting price: 1) select the price objective, 2) determine demand, 3) estimate costs, 4) analyze competitor price mix, 5) select pricing method, and 6) select final price. Examples are provided for each step and pricing concepts are explained with diagrams and stories. The document aims to teach marketing concepts through illustrations and real-world examples from the author's blog.
This document discusses various pricing techniques businesses can use to set product prices, including cost-based pricing, demand-based pricing, competition-based pricing, and affordability-based pricing. It also identifies key internal factors like marketing objectives and costs, and external factors like elasticity of demand, government regulation, and customer expectations that affect pricing decisions.
This document discusses pricing strategies and factors that affect pricing decisions. It begins by defining price and explaining that pricing is an important business decision. It then outlines various objectives of pricing, internal factors like costs and product differentiation, and external factors like competition and demand. The document also explains different pricing strategies such as penetration pricing, premium pricing, bundle pricing, and dynamic pricing. It concludes that setting objectives is important for determining appropriate pricing strategies.
This document discusses pricing strategies. It defines price and examines factors that influence pricing decisions, like objectives and costs. It also outlines three major pricing strategies: skimming, penetration, and cost-plus. Skimming aims for early adopters while penetration targets market share. Cost-plus marks up costs. The document also explores tactics like odd-even pricing and discounts, as well as using the product life cycle and elasticity of demand to inform pricing over time.
The document discusses various pricing strategies that businesses can employ. Long-term strategies include charging high prices for premium brands to boost image or lowering prices to increase sales volume for price-elastic products. Short-term strategies include initially charging high prices (skimming) for new products, lowering prices to gain market share quickly (penetration pricing), lowering prices to destroy competition (destroyer pricing), temporarily lowering prices to boost sales (promotional pricing), and varying prices based on demand (demand-oriented pricing).
Price is the amount charged for a product or service. Pricing is affected by internal factors like marketing objectives and costs, and external factors like demand, competition, and economic conditions. Internally, companies must consider objectives like profit, market share, or quality leadership to determine price. Costs like materials and overhead also influence pricing. Externally, companies analyze demand curves, competitor pricing, and macroeconomic trends to set competitive prices. The type of market structure, from perfect competition to monopoly, also impacts pricing power.
This document discusses product mix and product lines. It defines a product mix as the set of all products offered for sale and explains how analyzing product mix dimensions can help businesses expand. It also discusses how product line analysis can help companies develop platforms to meet customer needs while lowering production costs. Key aspects of product line analysis are product length lines, which are influenced by company objectives, and product mix pricing, which involves finding a price mix that maximizes total profits.
The document discusses various pricing strategies and considerations including psychological pricing, cost-based pricing, competitor-based pricing, and promotional pricing. It also covers pricing objectives, factors that influence pricing decisions, and common problems in setting prices. Examples and case studies are provided to illustrate pricing concepts along with references for further reading.
The document discusses factors that influence pricing decisions for businesses. It identifies several key determinants of price, including marketing objectives, competition, costs, product type, and market characteristics. Different pricing strategies are also outlined, such as cost-based pricing, competitive pricing, negotiated pricing, and discount pricing. The document provides examples of how these factors and strategies would impact pricing in different market environments and industries.
The document summarizes key concepts from two sections of Chapter 26 on pricing strategies. Section 26.1 discusses establishing a base price using cost-oriented, demand-oriented, or competition-oriented policies. It also addresses pricing over a product's life cycle. Section 26.2 outlines strategies for adjusting prices, including product mix, geographical, psychological, promotional, and discount pricing. It also details the six steps involved in determining prices.
This following presentation defines Pricing Strategy; A Cost-Based Price Strategy, price set up by calculate production cost, promotion cost, and overhead cost, then adding the desired profit to those calculation. A Demand-Based Price Strategy, price set up after analyzing consumer desires and determines the range of prices acceptable to the target market. A Competition-Based Price Strategy, the marketer sets prices in accordance with competitors.
The document discusses pricing strategies and factors to consider when setting prices. It covers internal factors like costs of production and external factors like competition and economic conditions. The major pricing strategies discussed are customer value-based pricing, cost-based pricing, and competition-based pricing. It also discusses strategies for new products, products within a mix, and adjusting prices for different customers. The objectives of pricing are to ensure business survival, improve profitability, and increase sales and market share.
This document discusses pricing strategies and considerations for marketing communicators. It defines price and explores factors that influence pricing decisions, both internal like costs and objectives, and external like competitors and demand. The document outlines general pricing approaches such as cost-based, value-based, and competition-based pricing. It also discusses strategies for new product pricing, pricing product mixes, and adjusting prices over time including discounts, segmented pricing, and psychological pricing techniques.
Students will get the knowledge of the following-
meaning of the pricing, its importance, objectives, methods of pricing, factors affecting the price of products, An overview of DPCO (Drug Price Control Order) and NPPA (National Pharmaceutical Pricing Authority)
Internal and external factors affect pricing decisions. Internally, companies consider objectives, costs, and organizational structure. Externally, they analyze the market, demand, competition, and economic conditions. Cost-based pricing sets prices as a markup over costs using methods like cost-plus or markup pricing. Demand and competition-based pricing adjust prices based on those factors. Break-even pricing calculates the price needed to cover fixed and variable costs at different production volumes. Pricing objectives include maximizing profits in the long or short run as well as gaining market share, sales, or returns.
This document provides an overview of key accounting and business concepts including the different branches of accounting, the differences between cost and price, understanding product and landed costs, and various pricing strategies. It discusses financial accounting, managerial accounting, cost accounting, tax accounting, and auditing as the main branches of accounting. It defines costs, price, and profit/margin. It also explains concepts like landed cost and product cost. Finally, it summarizes common pricing strategies such as cost-plus pricing, value-based pricing, penetration pricing, and skimming pricing.
This document discusses various pricing strategies that companies can employ:
1. Penetration pricing sets prices artificially low to gain market share, then prices are increased once market share is achieved. Price skimming charges high initial prices for products with substantial advantages.
2. Competitive pricing matches competitors' prices to avoid trial and error. Product line pricing reflects quality differences between a company's product range. Psychological pricing uses odd prices like $1.99 to increase demand.
3. Premium pricing charges high prices for unique brands to signal quality. Optional pricing sells accessories at higher prices. Bundle pricing offers package deals at lower combined prices to increase profits. Cost-based pricing adds a markup percentage to manufacturing costs
This document discusses pricing strategies and considerations for companies. It begins by outlining challenges companies face from pricing pressures. It then defines price and discusses pricing objectives, analyzing the pricing situation which includes customer sensitivity, costs, competitors, and legal issues. Common pricing strategies for new and existing products are described such as skimming, penetration, and intermediate strategies. Factors for determining specific prices and policies to manage pricing strategies are also covered. The document provides an overview of developing and implementing effective pricing approaches.
Pricing is the process of determining the value of goods and services and involves considering factors such as production costs, market competition, and target consumers. There are various pricing methods including cost-oriented methods like cost-plus pricing which adds a markup to costs, and market-oriented methods like perceived value pricing which considers how customers value quality, advertising, etc. When determining prices, businesses must weigh internal factors like costs and objectives as well as external factors like competition, government regulations, and economic conditions. The goal is to set a price that allows the business to survive in the market and earn a profit.
This document discusses pricing strategies and factors that affect pricing decisions. It defines price and explores the importance of pricing objectives. Key factors that influence pricing include costs, competition, customers and economic conditions. The document also analyzes pricing strategies such as competitive pricing, penetration pricing and premium pricing. It provides examples of how Samsung and Apple employ different pricing approaches. Finally, it concludes that selecting pricing objectives and strategies requires consideration of business goals and allowing flexibility to change over time.
This document provides an overview of pricing strategy concepts through several chapters. It begins with an introduction to pricing and objectives. Chapter 1 defines pricing and discusses pricing objectives such as profit-related, sales-related, competition-related, and customer-related. Chapter 2 examines internal and external factors that influence pricing decisions. Chapter 3 outlines various pricing approaches and policies including cost-based, value-based, competition-based, and product-line pricing. Chapter 4 defines pricing strategy and discusses strategies such as penetration pricing, economy pricing, price skimming, and product-mix pricing. The document also includes a case study and conclusion.
The document discusses developing pricing strategy and provides information on:
- Factors that influence pricing like costs, demand, competition
- Common pricing mistakes like not adjusting for market changes
- Consumer psychology related to pricing like reference prices
- Methods for setting prices like cost-based, demand-based, competition-oriented pricing
- Steps in setting price which include selecting objectives, determining demand, analyzing costs and competition
The document discusses factors that affect price strategy, including costs, supply and demand, competition, and technological trends. It describes different pricing approaches like cost-based pricing, demand-based pricing, and competition-based pricing. It also covers psychological pricing techniques, calculating markups and discounts, and considerations for updating price strategy.
This document discusses various pricing strategies and methods. It covers:
1. Defining price and the factors that affect pricing like costs, demand, competition.
2. Different cost-based pricing methods like cost-plus and target return on investment.
3. Value-based methods like perceived value and customer value pricing.
4. Competition-based methods like going-rate, pricing above/below competitors.
5. Other strategies like price lining, product life cycle pricing, and responding to price changes.
The document discusses pricing strategies and considerations for products. It contrasts three approaches to price setting: cost-based, value-based, and competition-based. It also discusses pricing objectives, calculating breakeven points, and factors that influence pricing decisions such as costs, demand elasticity, and competitors. The document also defines the five main promotional tools of advertising, personal selling, sales promotion, public relations, and their various applications.
Price is one of several factors that influence purchasing decisions. It indicates quality and image while providing a measure of value. The importance of price depends on the product. Of the four Ps in marketing (product, place, promotion, price), price is the only one that directly generates revenue. When setting prices, companies consider objectives, costs, competition, consumer perceptions, and legal issues. Long-term strategies include high prices for premium brands, low prices to increase sales volume, and market prices matching competitors. Short-term strategies are used to enter new markets or boost existing sales through promotions.
This document outlines the topics that will be covered in a marketing management course. The course will cover 6 units: Marketing Concepts, Product Decision, Price Decision, Physical Distribution Decision, Promotion Decision, and Consumer Behavior. Each unit will explore key concepts and factors related to that area of marketing. For example, the Pricing Decision unit will discuss concepts of price, factors affecting price determination, pricing policies and types of price. The document also provides an overview of some lecture topics within each unit, such as new product development, branding, pricing strategies, and distribution channels.
This document discusses pricing strategies and factors that influence pricing decisions. It identifies the four Ps of marketing (Product, Price, Place, Promotion) and focuses on Price. It outlines internal factors like costs, organizational objectives, and external factors like competition and demand that affect pricing. Different pricing strategies are described such as cost-based, value-based, competition-based pricing as well as discount pricing, price segmentation, and promotional pricing. The document also discusses how price relates to the product lifecycle stages of introduction, growth, maturity, and decline.
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2. What is pricing strategy?
The method companies use to price their products or
services.
The price can be set to
maximize profitability for each unit sold or from the market
overall
defend an existing market from new entrants,
to increase market share within a market
to enter a new market.
2
4. Factors affecting pricing strategies
1. Customers
Consumers are very sensitive to the
price change of a product regardless
of economic and social class.
Products are
Price Elastic
Durable goods and services
Luxury goods and services
Price Inelastic
Essential goods
4
5. Factors affecting pricing strategies
2. Competition
How competitors price and sell their products
will have an effect on a firm’s pricing
decisions.
Today as many products sold online,
consumers can compare the prices of many
merchants before making a purchase
decision.
5
6. Factors affecting pricing strategies
3. Cost
a. Product cost
Cost related to
Product development and
testing / R& D
Product packaging
Employee salaries and benefits
Factory overheads
Promotion and distribution of
goods and services
6
7. Factors affecting pricing strategies
3. Cost
b. Economy and Government
Laws and Regulations
This includes the economic and
social environment, currency and
interest rates and unemployment
levels.
These factors affect cost of selling
and pricing decisions
7
9. Penetration Pricing
The price charged for products
and services is set artificially low
in order to gain market share.
Once this is achieved, the price
is increased.
An extreme form of penetration
pricing is called predatory
pricing
9
11. Price Skimming
11
The price charged for products
and services is high because the
company has a substantial
competitive advantage.
However, the advantage tends
not to be sustainable. The high
price attracts new competitors
into the market, and the price
inevitably falls due to increased
supply.
12. Premium Pricing
High price is used as a defining
criterion.
The high pricing of premium
product is used to enhance
and reinforce a product's luxury
or high quality image
12
13. Competition Pricing
Competitive pricing
consists of setting the
price at the same level
as one’s competitors.
This method relies on the
idea that competitors
have already
thoroughly worked on
their pricing.
13
14. Product Line Pricing
Where there is a range of products
or services the pricing reflects the
benefits of parts of the range.
14
15. Psychological Pricing
This approach is used
when the marketer
wants the consumer to
respond on an
emotional, rather than
rational basis.
15
16. Cost Plus Pricing
Cost-plus pricing is a
straightforward and
simple way to arrive at a
sales price by adding a
markup to the cost of a
product
16
17. Cost-based pricing
Cost-based pricing
involves setting prices
based on the costs for
producing, distributing
and selling the product.
Also, the company
normally adds a fair rate
of return to compensate
for its efforts and risks.
17
18. Optional Product Pricing
Pricing of optional or accessory
products along with a main
product. In many cases, you
can buy optional or accessory
products along with the main
product.
18
20. Bundle Pricing
The act of placing several
products or services together
in a single package and
selling for a lower price than
would be charged if the items
were sold separately. The
package usually includes one
big ticket product and at
least one complementary
good
20