Price is all around us.

Price: the money a customer must pay for a product or service.

Part of the Marketing Mix

Pricing: pricing is art of translating into quantitative terms the value of the product of a service to customers

You pay rent for your apartment, tuition for your education, and a fee to your dentist or physician. The airline, railways, taxi and bus companies charge you a fare; the local utilities call their price a rate; and the local bank charges you interest for the money you borrow.

. Pricing is a determinant of the market demand for the product Price is the exchange value of a product

Customer Value Competitors Price Cost of the Company Strategic and Pricing Objective of the Company

To maximize long-run & short-run prices To increase sales volume To increase market share To obtain a target rate of return on investment To stabilize market & market price To achieve company growth To maintain price leadership To match competitors price
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To enhance the image of the firm, brand ,or product To get competitive advantage

Price

Internal Factors 1. Organizational factors 2. Marketing Mix 3. Cost of the product 4. Objective of the firm

Pricing Decision

External Factors 1. Demand 2. Competition 3. Suppliers 4. Economic condition 5. Buyers 6. Government

Market Skimming Penetration Pricing Value Pricing Psychological Price Leadership Price Discrimination

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High price, Low volumes Skim the profit from the market Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out) Examples include: Playstation, jewellery, digital technology, new DVDs, etc.

Price set to penetrate the market Low price to secure high volumes Typical in mass market products chocolate bars, food stuffs, household goods, etc. May be useful if launching into a new market

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Price set in accordance with customer perceptions about the value of the product/service Examples include status products/exclusive products

Used to play on consumer perceptions Classic example -999 instead of 1000 Links with value pricing high value goods priced according to what consumers think should be the price

In case of price leader, rivals have difficulty in competing on price too high and they lose market share, too low and the price leader would match price and force smaller rival out of market May follow pricing leads of rivals especially where those rivals have a clear dominance of market share Where competition is limited, going rate pricing may be applicable banks, petrol, supermarkets, electrical goods

Deliberate price cutting or offer of free gifts/products to force rivals (normally smaller and weaker) out of business or prevent new entrants

Charging a different price for the same good/service in different markets Requires each market to be impenetrable Requires different price elasticity of demand in each market

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