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Marketing - pricing
The document discusses pricing strategies and factors that affect pricing. It provides an agenda for a workshop on pricing, outlines learning objectives about the role of price in marketing. It discusses how perceived benefits and costs impact price, and lists factors that influence pricing decisions like competition, supply and demand, customer expectations. Graphs and examples show how pricing impacts sales revenue and profits. The document concludes with suggestions to review benefits and prices to identify price increase opportunities.
Marketing - pricing
- 1. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Marketing Pricing
- 2. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Agenda • Business Surgery • Workshop – Pricing • Action planning
- 3. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Workshop Context MARKETING SALES OPERATIONS MONEY SYSTEMISATION AND RESILIENCE BUSINESS PLANNING VALUE BUSINESS DIRECTION PEOPLE
- 4. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Learning Objectives • To explain the role of price in marketing • To understand the factors that affect price
- 5. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Benefits and Price • The reasons customers leave – Death or moving away: – The influence of friends or relations: – Competitor marketing & offers: – Dissatisfaction with product or price: – Perceived indifference of supplier: 4% 5% 9% 14% 68% Source: “Lessons From The Field” Feiertag & Hogan
- 6. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Benefits and Price Source: “RightNow Technologies Price Service Suppliers think customers leave because of: 48% 21% Customers actually leave because of: 25% 73%
- 7. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Benefits and Price CORE PRODUCT ADDITIONAL BENEFITS INTANGIBLE BENEFITS A new stove We’ll deliver and install it You can take out an additional warranty
- 8. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Benefits and Cost CORE PRODUCT My costs Lower Customer value Higher Lower Higher
- 9. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Pricing Factors • What factors affect the price you can charge? – The degree of competition, choice and transparency – The balance between supply and demand – The power of customers – Market price and customer expectations – Your direct costs – Reason for purchase • Desire, need or compulsion? Urgency – Customer switching costs (lock-in) or what they forgo by choosing someone else (USP) – Risk, brand or reputation
- 10. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Pricing • Why is pricing important? Unit price £10 £11 £9.50 Units sold 10,000 10,000 10,000 Sales revenue £100,000 £110,000 £95,000 Direct costs £90,000 £90,000 £90,000 Gross margin £10,000 £20,000 £5,000 Units for same gross margin 5,000 20,000 Sales revenue £55,000 £190,000 Direct costs £45,000 £180,000 Gross margin £10,000 £10,000
- 11. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Price Curve £0 £50 £100 £150 £200 £250 £300 £350 £400 £450 £500 0 10 20 30 40 50 60 70 £10 £12 £14 £16 £18 £20 Grossmargin Demand(unitssold) Unit price
- 12. Copyright ©Nick BettesConsulting www.nickbettes.co.uk Implementation in Your Business • Suggestions – Review your mix of benefits and prices to identify price increase opportunities