intro to marketing mr. bernstein pricing strategy, pp 526-581 november 19-20, 2014

Intro to Marketing

Mr. Bernstein

Pricing Strategy, pp 526-581

November 19-20, 2014

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Factors Affecting Price (pp 526-536)Costs – Fixed or VariableSupply and DemandConsumer PerceptionsCompetitionWhat are your objectives?

Return on InvestmentGaining Market ShareCash Flow / Survival

Legal / Ethical Issues

Intro to MarketingMr. Bernstein

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Pricing Strategy Approaches (pp 544-551)Cost-Based Pricing

Cost plus markupDemand-Based Pricing

“What the market will bear”Competition-Based Pricing

“Price Takers”Flexible or One-Price PolicyWhat causes pricing strategy to change over time?

Intro to MarketingMr. Bernstein

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Pricing Techniques (pp 552-559)Psychological pricing:

Prestige pricingOdd/even pricingPrice lining

Promotional pricingMultiple Unit discountsBundle pricing

Intro to MarketingMr. Bernstein

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How often should pricing be revised?Elastic demand – revise oftenDo you compete primarily on price, service or

quality?

Intro to MarketingMr. Bernstein

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Analyzing Pricing (pp 566-581)Break-even Analysis: Number of units that must be

sold to cover fixed costs

Fixed Costs / (Unit Selling Price – Variable Costs) = Break-Even Point

Intro to MarketingMr. Bernstein

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Analyzing PricingMarkup: Amount added to the cost of an item

Cost + Markup = PriceMarkup / Cost = Percentage Markup

AKA “Gross Margin”; doesn’t include overhead costs

Intro to MarketingMr. Bernstein