Pricing Strategies: Signals, Five C's, New Approaches, Macro Influences, Legal Factors - P, Study notes of Principles of Marketing

Download Pricing Strategies: Signals, Five C's, New Approaches, Macro Influences, Legal Factors - P and more Study notes Principles of Marketing in PDF only on Docsity! Chapter 12  Importance of Pricing  Benefit vs. cost  Most challenging of the 4 P’s to manage  Only P creating revenue  Important in purchase decisions  Price is a Signal  Prices can be both too high and too low  Too high: might signal low value  Too low: might signal poor quality  Match the product or service with the consumer’s value perceptions  Different priced vodka’s  The Five C’s of Pricing  Customers  Do not need to know pages 230 – 233  Psychological factors affecting pricing  Reference prices  External price reference  When someone gives you a price / sale price  Internal reference price  Your own perception of what the price should be  Everyday low pricing  No sales, always at the lowest price  High / low pricing  Everything at a higher price then have some sale days  Costs  Do not need to know information in this section on pages 234 – 235  Do not need to know pages 236 - 237  Competition  Do not need to know pages 237 – 239  Channel Members  Do not need to know pages 239  Company Objectives  Profit orientation  Target profit pricing  Identify the price where the product will be competitive  Define desired profit per unit  Price minus profit and make at this cost  Maximizing profits  At what point can we make the most revenue  Target return pricing  What are the assets that we have  What is the rate of return we will got on the given product  Want to make a certain percentage return on the product  Sales orientation  Focus on increasing sales  Concerned with overall market share  Competitor orientation  Premium pricing  Setting prices above those in the market place  Status quo pricing  Firm sets price and only changes to meet competition  Gas stations  Customer orientation  Customer needs and value perceptions assessed  Target price set  New product pricing strategies  Price skimming  Must be a high quality item  New technology (tv’s, iphone)  Market penetration strategy  Walmart – using very low prices  Experience curve  Production costs decrease as your volume costs increase  Macro Influence on pricing  Everything outside the company  The internet  Increased price sensitivity  New product categories  Growth of online auctions  Economic factors  Cross – shopping  Globalization  Local economic conditions  Competition  Disposable income  Unemployment  Legal Aspects and Ethics of Pricing  Deceptive or illegal price advertising  Deceptive reference prices  Manufacturer price is not a real price  Loss leader pricing  Leader pricing  Pricing strategy where to increase store traffic, prices are at or just above cost  Loss leader pricing  Price the product below store cost  Bait and switch  Predatory Pricing  Set prices so aggressively low to drive someone else out of business  Price discrimination  Price discrimination  Sells at different prices to different entities.  Can sell at different prices to different customers  Quantity discounts  Buying in bulk so getting a discount