Transcript PRICING DECISIONS

PRICING DECISIONS
Marketing Management
Session 9
November 7, 1997
SESSION OUTLINE
• The price: what it means to buyers and
seller
• Price in the marketing mix
• Pricing decisions:
– choosing the pricing method
– choosing the pricing strategy
– setting the price
• Video: Leader of the pack
• Case presentations: Fottle, part II
PRICE
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Most visible aspect of the marketing mix
Generates revenues and therefore profits
Generally controled by the seller
Highly regulated
Communication tool for
– buyers
– competitors
– shareholders
PRICE IN THE MIX
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Consistent with positioning
Sufficiently high to cover costs
Sufficiently low to generate demand
Competitive
Many interactions with other areas (finance,
accounting, production, …)
PRICING METHODS
• Cost-based
• Demand based
• Competitive pricing
– Advantages?
– Disadvantages?
PRICING STRATEGY
• Skimming pricing:
– high introduction price
– quick recovery of investment
• Penetration pricing:
– low introduction price
– achieve large market share
SETTING PRICE
• Price itself
• Price to resellers
• Flexible pricing policies
– quantity discounts
– co-op allowances
– price discrimination over time
NEXT WEEK
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Communication mix
Read chapter 14
Definition of promotional tools
The communication process
Push and pull strategies