Session 23 MG 220 BBA - 3 Nov 10

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Session 23
MG 220 Marketing Management
BBA 09 Sec C

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Session 23 MG 220 BBA - 3 Nov 10

  1. 1. MG 220 Marketing Management BBA 09 – Sec C Fall 2010 Muhammad Talha Salam, Asst. Professor talha.salam@nu.edu.pk Access it online: www.slideshare.net/talhasalam Part 5: Shaping the Marketing Offerings > Understanding Pricing > Setting the Price: Review Class Presentation | Session 23 | 3 Nov 2010
  2. 2. Access it online: www.slideshare.net/talhasalam Understanding Pricing Price is the only revenue-producing “P”. Rest all are costs Historically: • Price was always set with negotiations. • Only in 19th century, one-price concept was introduced which we all use today (mostly) How Companies Price • Large Companies: Pricing is handled by Product Manager, Line Managers, Marketing team etc. • Small Companies: Top Management decides • Even in Large companies, price is based on some important objectives MG 220 Marketing Management 2
  3. 3. Access it online: www.slideshare.net/talhasalam Understanding Pricing Setting Pricing Strategy & Objectives requires understanding of Consumer Psychology Consumer Psychology & Pricing • Economists consider consumers to be ‘price-takers’ • IMP: Consumers have their own perceptions and purchasing decisions are based on their perception of a product’s stated and its stated price • Three important topics to be considered: – Reference Prices – Price-Quality Inferences – Price Endings (or Cues) MG 220 Marketing Management 3
  4. 4. Access it online: www.slideshare.net/talhasalam Understanding Pricing Consumer Psychology & Pricing • Reference Prices – Consumer’s own knowledge of prices – Generally a range and not exact number – Consumers compare observed prices with both internal and external reference prices – When these references are evoked: Unpleasant surprises (if ref. price is lower than observed) can impact more than pleasant surprises (if ref. price is higher than observed) • Price-Quality Inferences – Many consumers use price as an indicator of Quality – Example of Perfume: It may cost 20 Rs but selling it even for 40 will give signal of being a low quality product! – Price acts a signal of quality particularly when there is no other indicator or information about quality is available. • Price Cues – Many sellers believe price should end in an odd number – Also using 299 instead of 300 gives a different cue – Using “Sale” can also give a perception about price – But it should be used very carefully MG 220 Marketing Management 4
  5. 5. MG 220 Marketing Management BBA 09 – Sec C Fall 2010 Muhammad Talha Salam, Asst. Professor talha.salam@nu.edu.pk Access it online: www.slideshare.net/talhasalam Part 5: Shaping the Marketing Offerings > Setting the Price > Adapting the Price > Initiating and Responding to Price Changes Class Presentation | Session 24 | 8 Nov 2010

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