factor for pricing
TRANSCRIPT
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PRICE AFFECTINGDECISION BY HAMMADAFZAL
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Factors Affecting Price
Decisions
Internal FactorsMarketing ObjectivesMarketing Mix StrategyCostsOrganizationalconsiderations
Internal FactorsMarketing ObjectivesMarketing Mix StrategyCostsOrganizationalconsiderations
External Factors
Nature of the marketand demand
CompetitionOther environmental
factors (economy,resellers, government)
External Factors
Nature of the marketand demand
CompetitionOther environmental
factors (economy,resellers, government)
PricingDecisions
PricingDecisions
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Marketing
Objectives
SurvivalLow Prices to Cover Variable Costs andSome Fixed Costs to Stay in Business.
Current Profit MaximizationChoose the Price that Produces the
Maximum Current Profit, Etc.
Market Share Leadership
Low as Possible Prices to Becomethe Market Share Leader.
Product Quality LeadershipHigh Prices to Cover Higher
Performance Quality and R & D.
Internal Factors Affecting Pricing
Decisions: Marketing Objectives
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Price
Product Design
Distribution
Promotion
NonpricePositions
Internal Factors Affecting Pricing
Decisions: Marketing Mix
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Market andDemand
Competitors Costs,Prices, and Offers
Other External FactorsEconomic ConditionsReseller Needs
Government ActionsSocial Concerns
External Factors Affecting
Pricing Decisions
Competitor Costs
This ad by LCI International accuses its competitors of using
unfair practices in pricing, hiding fees incurred by rounding up.
Hidden fees, defined ascramming by the
FCC, are the number
one source of billing
complaints amonglong-distance
customers.
Why is LCI focusing on
this practice?
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Pure CompetitionPure CompetitionMany Buyers and Sellers
Who Have LittleEffect on the Price
Pure CompetitionPure CompetitionMany Buyers and Sellers
Who Have LittleEffect on the Price
MonopolisticMonopolisticCompetitionCompetition
Many Buyers and SellersWho Trade Over a
Range of Prices
MonopolisticMonopolisticCompetitionCompetition
Many Buyers and SellersWho Trade Over a
Range of Prices
Pricing in Different Types of Markets
Market and Demand Factors
Affecting Pricing Decisions
OligopolisticOligopolisticCompetitionCompetition
Few Sellers Who AreSensitive to Each Others
Pricing/ Marketing
Strategies
OligopolisticOligopolisticCompetitionCompetition
Few Sellers Who AreSensitive to Each Others
Pricing/ Marketing
Strategies
Pure MonopolyPure MonopolySingle Seller
Pure MonopolyPure MonopolySingle Seller
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Major Considerations in Setting
Price (Fig. 10.5)
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Cost-Based Pricing
Certainty AboutCosts
Pricing isSimplified
Price CompetitionIs Minimized
UnepectedSituational actors
Attitudesof
Others
Ethical
IgnoresCurrent
Demand &Competition
Cost-PlusPricing is anApproach That
Adds a
StandardMarkup to theCost of theProduct.
SimplestPricingMethod
Much airer to
Buyers & Sellers
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Product
Cost
Price
Value
Customers
Customer
Value
Price
Cost
Product
Cost-Based Pricing Value-Based Pricing
Cost-Based Versus Value-Based
Pricing
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Setting Prices
Sealed-BidCompany Sets Prices Based on
What They Think CompetitorsWill Charge.
Going-RateCompany Sets Prices Based on What
Competitors Are Charging.
??
Competition-Based Pricing
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New Product Pricing Strategies
Market Skimming
Setting a High Pricefor a New Product toSkim MaximumRevenues from theTarget Market.
Results in Fewer, ButMore Profitable Sales.
Market Skimming
Setting a High Pricefor a New Product toSkim MaximumRevenues from theTarget Market.
Results in Fewer, ButMore Profitable Sales.
Use Under TheseConditions:
Products Quality andImage Must Support ItsHigher Price.Costs Cant be so Highthat They Cancel theAdvantage of ChargingMore.Competitors Shouldnt beAble to Enter MarketEasily and Undercut theHigh Price.
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New Product Pricing Strategies
Market Penetration
Setting a Low Price for aNew Product in Order toPenetrate the MarketQuickly and Deeply.
Attract a Large Numberof Buyers and Win aLarger Market Share.
Market Penetration
Setting a Low Price for aNew Product in Order toPenetrate the MarketQuickly and Deeply.
Attract a Large Numberof Buyers and Win aLarger Market Share.
Use Under TheseConditions:
Market Must be HighlyPrice-Sensitive so a LowPrice Produces MoreMarket Growth.Production/ DistributionCosts Must Fall as SalesVolume Increases.Must Keep OutCompetition & MaintainIts Low Price Position orBenefits May Only be
Temporary.
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Product Mix-Pricing
Strategies:Product Line PricingInvolves setting pricesteps between various
products in a productline based on:
Cost differencesbetween products,
Customer evaluations ofdifferent features, and
competitors prices.
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Product Mix- Pricing Strategies
Optional-ProductPricing optional or
accessory productssold with the mainproduct. i.e camera bag.
Captive-ProductPricing products thatmust be used with themain product. i.e. film.
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Product Mix- Pricing
Strategies
By-Product
Pricing low-valueby-products to getrid of them andmake the mainproducts pricemore competitive.
i.e. sawdust, ZooDoo
Product-Bundling
Combining severalproducts andoffering thebundle at areduced price.
i.e. theater seasontickets.
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Discount and Allowance Pricing
Cash Discount Seasonal Discount
Quantity Discount Trade-In Allowance
Functional Discount Promotional Allowance
Adjusting Basic Price to Reward Customers
For Certain Responses
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Psychological Pricing
Considers the psychology ofprices and not simply the
economics.Customers use price lesswhen they can judge qualityof a product.
Price becomes an importantquality signal whencustomers cant judgequality; price is used to saysomething about a product.
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Special-Event PricingCash Rebates
Low-Interest Financing
Longer Warranties
Free Merchandise
Discounts
Loss Leaders Temporarily Pricing
Products Below ListPrice to IncreaseShort-Term Sales
Through:
Promotional Pricing