chapter 10- 11 Flashcards
pricing
What is price, what does price represent
the amount of money charged for a product or service
- the price produce revenue the other 3P represents cost
- easier to change compare to other p’s price is more flexible
- customer may make inferences about the products based on price
factors affecting pricing decisions
( 4 factors )
1- price ceiling
2- internal considerations
3- external considerations
4- price floor
( factors affecting pricing decisions)
Price ceiling
customers perception of the value ( no demand above this price )
( factors affecting pricing decisions)
internal considerations
marketing goals
marketing mix strategy
costs
organizational considerations
( factors affecting pricing decisions)
external considerations
nature of market
consumer demand
competition
environmental factors
( factors affecting pricing decisions)
Price floor
product costs
internal factors affecting price
MARKETING GOALS
survival
market share leadership
current profit maximization
product quality leadership
survival –> low prices to cover variable costs and some of fixed costs
market share leadership –> low prices to increase market share
prevent competition from entering the market
current profit maximization –> choose the prices that maximizes current profit cash flow or ROI
Product quality leadership –> high prices & high quality
internal factors affecting price
MARKETING MIX STRATEGY
price must be in coordination with the other 3 P’s
- keep in mind positioning and the target market
segmentation affects pricing because price varies over segments
–> price discrimination = charging different prices to segments according to their price elasticity or sentivity
internal factors affecting price
ORGANIZATIONAL CONSIDERATIONS
who sets the price, who has the authority
for small companies. = top managment
for large companies = marketing or sales departmetns
industrial markets = managment or sales people
when pricing is key/complex = pricing departments
