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Price
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the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service
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Marketing objectives
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survival, current profit maximization, market share leadership, product quality leadership
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Non profit marketing objectives
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Partial cost recovery, full cost recovery, social profit
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marketing mix strategy
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Pricing must be coordinated with other marketing mix variables, price is important in product positioning
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Target costing
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base selling price on customer considerations and then works backwards to figure costs. Non price strategies.
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types of costs
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fixed, variable and total
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costs
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vary at different levels of productions: economies of scale, it will vary with experience: experience or learning curve
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Who sets the price
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Upper management, Sales and marketing department, division or production managers, pricing department
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External factors: types of market
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Pure competition, monopolistic competition, oligopolistic competition, pure monopoly
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Consumers' perceptions of value
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Demand curve, price elasticity, elastic demand, inelastic demand
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Factors for setting prices
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Value added pricing, pricing power, good value pricing, everyday low pricing, high low pricing, cost based pricing,
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Value added pricing
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value added features and services to differentiate offers, support higher prices and build pricing power`
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Pricing power
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the ability to escape price competition and to justify higher prices and margins without losing market share
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good value pricing
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offers the right combination of quality and good service to fair price
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Everyday low pricing
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charging a constant everyday low price with few or no temporary price discounts
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High low pricing
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charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
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Cost based pricing
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setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk. Adds a standard markup tot he cost of the product
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Fixed costs
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the costs that do not vary with production or sales level
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Variable costs
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Costs that vary with the level of production
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Total costs
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the sum of the fixed and variable costs for any given level of production
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Average costs
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the cost associated with a given level of output
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Cost plus pricing
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adds a standard markup to the cost of the products
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Break even pricing
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the price at which total costs are equal to total revenue and there is no profit
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Target profit pricing
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the price at which the firm will break even or make a profit it's seeking
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Target costing
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starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met
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Demand Curve
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shows the number of units the market will buy in a given period at different prices
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price elasticity of demand
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illustrates the response of demand to a change in price
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Inelastic demand
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occurs when demand hardly changes when there is a small change in price
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Elastic demand
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occurs when demand changes greatly for a small change in price
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