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Pricing and Promotion: Project Contents Course: BUS 101 Lecturer: NNA Pricing • The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service. Ch 10 -2 Copyright © 2011 Pearson Education Walmart, the world’s largest retailer, and Amazon.com, the world’s largest online merchant, are at war over the hearts and dollars of online shoppers. The weapon of choice? Prices. However, although price can be a potent Customer Perceptions of Value Value –Based Pricing Value-based pricing uses the buyers’ perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set. Copyright © 2011 Pearson Education Customer Perceptions of Value Value-Based Pricing Good-value pricing offers the right combination of quality and good service to fair price. Existing brands are being redesigned to offer more quality for a given price or the same quality for less price. Good-value pricing example: Ryanair appears to have found a radical new pricing solution, one that customers are sure to love: Make flying free! Customer Perceptions of Value Value-Based Pricing: Value-Added Pricing •Value-added pricing attaches value-added features and services to differentiate offers, support higher prices, and build pricing power. Ch 10 -5 Copyright © 2011 Pearson Education Value-added pricing example: Rather than dropping prices for its venerable Stag umbrella brand to match cheaper imports, Currims successfully launched umbrellas with funky designs, cool colors, and value-added features and sold them at even higher prices. Company and Product Costs Cost-Based Pricing •Cost-based pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk. Ch 10 -6 Copyright © 2011 Pearson Education Company and Product Costs Competition-Based Pricing • Setting prices based on competitors’ strategies, prices, costs, and market offerings. Pricing against larger, low-price competitors: Independent bookstore Annie Bloom’s Books isn’t likely to win a price war against Amazon.com or Barnes & Noble. Instead, it relies on outstanding customer service and a cozy atmosphere to turn booklovers into loyal customers. The Promotion Mix Marketing Communication Mix •The promotion mix or marketing communication mix is the specific blend of advertising, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships. Ch 11 - 8 Copyright © 2011 Pearson Education The Promotion Mix Major Promotion Tools Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. • Broadcast • Print • Internet • Outdoor Ch 11 - 9 Copyright © 2011 Pearson Education The Promotion Mix Major Promotion Tools Sales promotion is the short-term incentives to encourage the purchase or sale of a product or service. • Discounts • Coupons Ch 11 - 10 Copyright © 2011 Pearson Education The Promotion Mix Major Promotion Tools Public relations involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. • Press releases • Sponsorships • Special events Ch 11 - 11 Copyright © 2011 Pearson Education The Promotion Mix Major Promotion Tools Personal selling is the personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships. • Sales presentations • Trade shows Ch 11 - 12 Copyright © 2011 Pearson Education The Promotion Mix Major Promotion Tools Direct marketing involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships—through the use of direct mail, telephone, direct-response television, e-mail, and the Internet to communicate directly with specific consumers. • Catalog • Telemarketing • Kiosks Ch 11 - 13 Copyright © 2011 Pearson Education