using the marketing mix: pricing lo: to understand the difference between the various pricing...
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Using the marketing mix: pricing
LO: To understand the difference between the various pricing strategies and pricing tactics.
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What does price tell us about a product?
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Pricing strategies: approaches adopted in order to achieve marketing objectives
Price skimming
Penetration pricing
Price leadership and price taking
Predator (or destroyer) pricing
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Price skimming
Initially a high price is set to yield a high profit margin.
Used to target early adopters – people who want to be the among the first to purchase a new product.
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Penetration Pricing Predator (destroyer) pricing
Low prices are set to break into a market.
Low prices are set to drive a firm out of the market.
Aims to reduce the number of competitors in the market.
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Price Leadership and Price Taking
A large company (price leader) sets a market price that smaller firms (price takers) tend to follow.
In the petrol industry, price leadership is
shared amongst a few major firms.
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Pricing tactics: approaches adopted in the short term to suit particular situations
Loss leaders
Psychological pricing
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Loss leaders
A tactic in which a firm sets a low price for its
product(s) in order to encourage consumers to buy other products that provide profit for the firm.
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Psychological Pricing
A tactic intended to give the impression of value (e.g. selling a good for £9.99 rather than £10).
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To what extent is price the most important element of the marketing mix?
Plan an essay – with the key elements:◦Introduction with definition◦Arguments for◦Arguments against◦Evaluative points