pricing Flashcards
determines how much revenue a company is going to earn. It determines whether the business is covering the costs to create and deliver its products. drives the financial health of the business.
price
is a company that lets customers borrow expensive designer dresses for a short time at a low price—to wear on a special occasion, e.g.— and then send them back. A customer can rent a Theia gown that retails for $995 for four days for the price of $150. Or, she can rent a gown from Laundry by Shelli Segal that retails for $325 for the price of $100. The company offers a 20 percent discount to first-time buyers and offers a “free second size” option to ensure that customers get the right fit.
Rent the Runway
Whether a customer is the ultimate user of the finished product or a business that purchases components of the finished product, the customer seeks to satisfy a need through the purchase of a particular product. The customer uses several criteria to decide how much she is willing to spend in order to satisfy that need. Her preference is to pay as little as possible.
The Customer’s View of Price
value = perieved benifits - benifits costs
price value equation
places an emphasis on the finances of the product and business. A business’s profit is the money left after all costs are covered.
In other words, profit = revenue – costs. In the price per product is set higher than the total cost of producing and selling each product to ensure that the company makes a profit on each sale.
Profit-oriented pricing
A company simply copies it, or seeks to use price as one of the features that differentiates the product. That could mean either pricing the product higher than competitive products, to indicate that the firm believes it to provide greater value, or lower than competitive products in order to be a low-price solution.
competitor’s pricing strategy
is also referred to as value-oriented pricing. Given the centrality of the customer in a marketing orientation (and this marketing course!), it will come as no surprise that is the recommended pricing approach because its focus is on providing value to the customer. “Demonstrating Customer Value”) and establishes the price that balances the value. The company seeks to charge the highest price that supports the value received by the customer.
Customer-oriented pricing
It goes without saying that the
service or product you’re selling
should be at the centre of every
element of the marketing mix.
PRODUCT
The strategy behind the pricing of your
product needs to be based on what your
customers are prepared to pay, costs suchas retail mark-up and manufacturing, as
well as other considerations.
PRICE
Where are you selling your product or service? There
are many places and ways that businesses can sell. doesn’t just refer to a physical location. It could
mean selling via a website, catalogue, social media,
utilising trade shows and, of course, brick and mortar
stores. Place’ encompasses each and every distribution
channel. Most companies can’t, or don’t, set up shop just
anywhere. There are a number of factors that need to be
considered first. Your target audience will play a part
when it comes to your distribution channels.
place
is about communicating information
about your products and services to your target
customer segments. It’s usually designed to
create a response. As part of promotion, also
consider your other communication, for example,
to your partners and employees.
Promotion
Having the right people is a no-brainer since they are as much a part of your business offering as the products/services you provide.
Employee performance, appearance, and
customer service are all examples of this.
As a result, establishing what constitutes
the “appropriate people” for your company
might be difficult, but it should include the
following three factors:
Exceptional service
Genuine enthusiasm
Be open to suggestions
people
Physical proof is a must-have for the 7 Ps
of marketing. It might be material or
intangible, and you should provide proof
of delivery. Product packaging, receipts,
and customer service are all physical
examples. The perception of a company’s
product in the marketplace is intangible
physical proof.
Consistent branding across channels is a means to
impact customers’ views to the point that your
brand is the first thing that comes to mind when
they hear a word, sound, or phrase.
Consider who comes to mind when you think about
fast Pizza. Pizza Hut is a popular answer. Their
existence in the marketplace is immediately
noticeable. That is Intangible physical evidence.
physical evidence
is an element of Services
Marketing Mix. The delivery of your
service is usually done with the customer
present so how the service is delivered is
once again part of what the consumer is
paying for. This element of the marketing
mix looks at the systmes used to deliver
the service.
Process
n = FC /( p – V)
Using the same inputs for the variables, your equation looks like this: n = $500 / ($2 – $.05)
n = $500 / $1.95
n = 256.41 cookies
Calculating Break-Even Quantity
p = (Vn + FC) / n
n = 2,500
V = $.05
FC = $500
Therefore, p = (($.05 x 2,500) + $500) / 2,500
p = ($125 + $500) / 2,500
p = $.25
Calculating Break-Even Price
Once a business decides to use price as a primary competitive strategy, there are many well-established tools and techniques that can be employed. The pricing process normally begins with a decision about the company’s pricing approach to the market. Price is a very important decision criterion that customers use to compare alternatives. It also contributes to the company’s position. In general, a business can price its offering to match its competition, or it can price higher or price lower. Each has its pros and cons.
Competitive Pricing
Many organizations attempt to establish prices that, on average, are the same as those set by their more important competitors. Automobiles of the same size with comparable equipment and features tend to have similar prices, for instance. This strategy means that the organization uses price as an indicator or baseline. Quality in production, better service, creativity in advertising, or some other element of the marketing mix is used to attract customers who are interested in products in a particular price category.
Pricing to Meet Competition
Pricing above competitors can be rewarding to organizations, provided that the objectives of the policy are clearly understood and the marketing mix is developed in such a way that the policy can be successfully implemented by management.
Pricing above competitors
While some firms are positioned to price above competition, others wish to carve out a market niche by pricing below competitors. The goal of such a policy is to realize a large sales volume through a lower price and lower profit margins. By controlling costs and reducing services, these firms are able to earn an acceptable profit, even though profit per unit is usually less.
Pricing Below Competitors
We have discussed common company objectives that affect pricing and the competitive impact on pricing. The most important perspective in the pricing process is the customer’s. Value-based pricing brings the voice of the customer into the pricing process. It bases prices primarily on the value to the customer rather than on the cost of the product or historical prices determined by competitors.
The Customer and the Pricing Decision
