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WHAT IS PRICING
• Is the process whereby a business sets
the price at which it will sell its products
and services.
• Is the value that is put to a product or
service and is the result of a complex
set of calculations.
FACTORS AFFECTING
PRICE DECISIONS
INTERNAL FACTORS AFFECTING
PRICING DECISIONS: MARKETING
OBJECTIVES
Survival
Low Prices Hoping to Increase Demand.
Total Costs
Sum of the Fixed and Variable Costs for Any Given
Level of Production
MARKET AND DEMAND
FACTORS AFFECTING PRICING
DECISIONS
Pricing in Different Types of Markets
Pure Competition
Many Buyers and Sellers Pure Monopoly
Who Have Little Single Seller
Effect on the Price
Monopolistic Oligopolistic
Competition Competition
Many Buyers and Sellers Few Sellers Who Are
Who Trade Over a Sensitive to Each Other’s
Range of Prices Pricing/ Marketing
Strategies
COST-BASED PRICING
Certainty About
Costs
Simplest
Cost-Plus Pricing is Pricing
Ethical
an Approach That Method
Factors
Pricing is Adds a Standard
Situational
Markup to the Cost of
Simplified Unexpected
the Product
10-10
PRODUCT MIX-PRICING STRATEGIES
• Optional-Product
• Pricing optional or
accessory products
sold with the main
product. i.e camera
bag.
• Captive-Product
• Pricing products that
must be used with the
main product. i.e. film.
10-11
PRODUCT MIX-PRICING STRATEGIES
• By-Product • Product-
• Pricing low- Bundling
value by- • Combining
products to get several
rid of them and products and
make the main offering the
product’s price bundle at a
more reduced price.
competitive. • I.e. theater
• I.e. sawdust, season tickets.
Zoo Doo
DISCOUNT AND ALLOWANCE
PRICING
Low-Interest Financing
Longer Warranties
Free Maintenance
Discounts
PRICING TO BUILD TRUST WITH YOUR
CUSTOMERS
PRICING SHOULD:
• Be straightforward and easy to understand.
• Be complete.