Transcript 9-MAR331
Pricing and Sales Promotion A Wrap Up MAR 331 Pricing and Sales Promotion A Wrap Up • Marketing and Pricing – Price/Value Relationships – Role of the Distribution Channel • Retailer vs. Consumer Pricing and Sales Promotion • Pricing can be temporary and permanent • Deal prices - trade promotion – Provided to get and maintain distribution – Temporary price reduction given to trade – Sometimes passed on to the consumer Consumer Pricing • Regular pricing • Temporary sales Price Elasticity • Customer sensitivity to price • When a relative change in volume is more than the relative change in price, demand is described as elastic. Price Elasticity • If the price is cut by 1% and demand increases by 5% , the brand is very elastic. • When demand is that sensitive to price, it pays to cut prices. Price Elasticity • Some products are not terribly sensitive to price • When a relative change in quantity sold is less than the relative change in price, demand is said to be inelastic. • When demand is inelastic, profits can be improved by raising prices. Price Elasticity and Advertising • An important part of your job as marketing manager is to make your brands less elastic • Higher prices • Little monopoly, more perceived differences Breakeven • BE = Fixed Costs divided by Mfr. Price less Variable costs • What is the volume necessary to cover your costs • Does NOT take the demand ceiling into account