Download Introduction to Marketing

Introduction to
Pricing
Prepared by
Gwen Cossin
Video
Agenda
Goals of Pricing
Concepts in Pricing
Setting Price
Defined
Price is the value of
money placed on a
good or service
Goals of Pricing
• Gaining Market Share
• Return on Investment
• Meeting the Competition
I
•
•
•
•
Can…
Recognize different forms of pricing
Use Break-Even Analysis
Analyze Demand Elasticity
Understand Governments Role
Beware of Bargains
The telemarketer did his best to
convince me to renew my
subscription for another year. “At
this price, it’s really a great bargain,”
he said.
“I’m elderly,” I laughed. “I might die
before the subscription ends.”
“No problem,” he assured me. “You’ll
get a refund.”
Reader’s Digest
Factors involved in
Price Planning
• Costs and Expenses
– Responding to Declining Profits
– Response to Lower Cost/Expense
– Break-Even shifts, e.g. the point at
which sales revenue equals the costs
and expenses of making and distributing
the product
Factors involved in
Price Planning
• Supply and Demand
– Elastic Demand
• when a shift in price results in a
change in demand
– Inelastic Demand
• When a shift in price has very little
effect on demand
Factors involved in
Price Planning
• Consumer Perceptions
– Quality
– Availability
– Service/Perks
Pet Rocks?
How stupid is that!!
Factors involved in
Price Planning
• Competition
– Price or non-price competition
– Government regulates pricing practices
Price Fixing
• Price Discrimination
• Resale Price Maintenance
(limits manufacturer policies)
• Minimum Price Laws
(retailers may not sell below cost vs “loss leaders”)
• Unit Pricing (packaging)
• Price Advertising (bait-n-switch)
Price Concepts Overview
• Cost-Oriented
– Markup
– Cost-Plus
• Demand-Oriented
– Works when there are no substitutes
• Competition-Oriented
– No relationship between cost and price
Product Life Cycle
Demand
Time
Product Life Cycle
Demand
Improve,
& Change
Time
Six Steps
in Setting Price
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Determine Objective
Study Costs
Estimate Demand (pilot)
Study Competition
Decide on Pricing Strategy
Set Price
Price Calculation
Refer to Chapter 27
Let’s try the
Pricing Worksheet Key
What is Marketing
According to the American Marketing
Association (AMA), marketing is defined
as "the process of planning and
executing the conception, pricing,
promotion, and distribution of ideas,
goods, and services to create
exchanges that satisfy individual and
organizational objectives."