Pricing as Part of Pricing as Part of The Marketing MixThe Marketing Mix
Chapters 25 and 26Chapters 25 and 26
Glenco: Marketing EssentialsGlenco: Marketing Essentials
What Affects Pricing?What Affects Pricing?
Costs and ExpensesCosts and Expenses Fixed ExpensesFixed Expenses Variable ExpensesVariable Expenses
Supply and DemandSupply and Demand Elastic DemandElastic Demand Inelastic DemandInelastic Demand
Factors Affecting Pricing con’tFactors Affecting Pricing con’t
CompetitionCompetition Monopoly Monopoly
Consumer PerceptionConsumer Perception Example: Generic vs. Branded ProductsExample: Generic vs. Branded Products
Base Pricing ConceptsBase Pricing Concepts
What is base pricing?What is base pricing? Types of pricing conceptsTypes of pricing concepts
Cost oriented pricingCost oriented pricing• Markup-retail pricingMarkup-retail pricing• Cost Plus Pricing-manufacturingCost Plus Pricing-manufacturing
Demand oriented pricingDemand oriented pricing Competition Oriented PricingCompetition Oriented Pricing
One Price vs. FlexibleOne Price vs. Flexible
One Price PricingOne Price Pricing All customers charged the same priceAll customers charged the same price
Flexible PricingFlexible Pricing Different customers pay different prices for Different customers pay different prices for
same itemsame item
Ways to Adjust Base PricingWays to Adjust Base Pricing
Product Mix StrategiesProduct Mix Strategies Price lining-groups of merchandise ($25.00, $35.00 Price lining-groups of merchandise ($25.00, $35.00
etc )etc ) Optional Product-special orderOptional Product-special order Captive Products- ex: printers and cartridgesCaptive Products- ex: printers and cartridges By Products-mulchBy Products-mulch Bundle pricing-ex: computersBundle pricing-ex: computers Geographical-location of customerGeographical-location of customer International International
• Exchange rates, tariffs, shipping rates, economic conditionsExchange rates, tariffs, shipping rates, economic conditions
Base Pricing AdjustmentsBase Pricing Adjustments
Segmented Pricing StrategiesSegmented Pricing Strategies Buyer identification-different segments pay Buyer identification-different segments pay
different pricesdifferent prices• Senior citizens, First Class travelers, StudentsSenior citizens, First Class travelers, Students
Product Design-Different product styles w/ Product Design-Different product styles w/ different prices (demand related) different prices (demand related) • North Face JacketsNorth Face Jackets
Purchase Location-Where products are soldPurchase Location-Where products are sold• New York Theater tickets vs. Road ShowsNew York Theater tickets vs. Road Shows
Time of Purchase-Peak times=more $Time of Purchase-Peak times=more $
Psychological Pricing StrategiesPsychological Pricing Strategies
Odd Even PricingOdd Even Pricing housing market 299.0 vs. $300.0housing market 299.0 vs. $300.0
Prestige PricingPrestige Pricing Higher markup ex: Rolex watches, MercedesHigher markup ex: Rolex watches, Mercedes
Multiple Unit PricingMultiple Unit Pricing 3/$5.003/$5.00
Everyday Low Price-WalmartEveryday Low Price-Walmart
Promotional PricingPromotional Pricing
Loss Leader- set below costLoss Leader- set below cost Special Event-reduced for short periodSpecial Event-reduced for short period Rebates and CouponsRebates and Coupons
Discounts and AllowancesDiscounts and Allowances
Cash Discounts- 2/10 net 30Cash Discounts- 2/10 net 30 Quantity DiscountsQuantity Discounts Trade Discounts- 40% off line price (closeouts)Trade Discounts- 40% off line price (closeouts) Seasonal Discounts-Dumping items at the end Seasonal Discounts-Dumping items at the end
of seasonof season Christmas, Halloween, swimwearChristmas, Halloween, swimwear
AllowancesAllowances Trade in’s on cars, major appliances, computer partsTrade in’s on cars, major appliances, computer parts
Questions to Ask When Questions to Ask When Determining PricesDetermining Prices
What are your pricing objectives?What are your pricing objectives? Competition, market share, profitabilityCompetition, market share, profitability
What are the costs involved in manufacturing?What are the costs involved in manufacturing? What is the demand for your product?What is the demand for your product? What does your competition charge?What does your competition charge? What should be your pricing strategy?What should be your pricing strategy?
Segmented, seasonal or location of marketSegmented, seasonal or location of market
What should be your price based on your What should be your price based on your answers to the above questions? answers to the above questions?
