The Marketing Mix: Product/Price Flashcards
Marketing Mix and the 4Ps
The marketing mix is a set of key elements used to promote a product or service effectively. It includes the 4Ps:
Product – What you are selling (goods or services).
Price – How much it costs.
Place – Where and how it’s sold.
Promotion – How you advertise and attract customers.
The main 5 methods of Pricing
- Cost- Plus Pricing
- Competitive Pricing
3.Penetration Pricing - Price Skimming
- Promotional Pricing
Cost-Plus Pricing
Cost-plus pricing is a pricing strategy where a business sets the price of a product by adding a fixed percentage (markup) to its total cost.
📌 Selling Price = Cost Price + Markup (%)
Competitive Pricing
Competitive pricing is a strategy where a business sets its prices based on what competitors are charging for similar products or services. Sometimes higher, lower or the same.
Penetration Pricing
Penetration pricing is a strategy where a business sets a low initial price to attract customers and gain market share quickly. Once the brand is established, the price is gradually increased.
Price Skimming
Price skimming is a strategy where a business sets a high initial price for a new product and gradually lowers it over time.
Promotional Pricing
Promotional pricing is a strategy where businesses temporarily lower prices to attract customers and boost sales.
Price Elastic Demand
Price elastic demand refers to a situation where a small change in price leads to a significant change in demand for a product or service.
Formula:
📌 Price Elasticity of Demand (PED) = (% Change in Quantity Demanded) / (% Change in Price)
If PED > 1, demand is elastic (highly responsive to price changes).
Price Inelastic Demand
Price inelastic demand occurs when a change in price has little effect on the quantity demanded.
Formula:
📌 Price Elasticity of Demand (PED) = (% Change in Quantity Demanded) / (% Change in Price)
If PED < 1, demand is inelastic (not very responsive to price changes).
