Chapter 10: Pricing Understanding and Capturing Customer Value

- Only aspect of marketing mix that directly generates revenue

- Consumers consistently rank price as one of the most important factors influencing purchase decisions

% change in quantity demanded / % change in price

Elastic = sensitive and Inelastic = Insensitive

1. Customer value-based pricing

2. Cost-based pricing

3. Competition-based pricing

Consumers have a set price or price range in their mind

• If the actual price is higher, consumers will feel the product is overpriced

• If it is too low below the internal reference price, consumers may assume its quality is inferior