...

• Price


  • Amount of money charged for a product or service
  • Sum of the values that consumers exchange for the benefits of having or using the product or service
• Pricing


  Act of determining the price of a product or service
• Internal factors affecting pricing

  • Objectives of pricing-Survival
  • Current profit maximization
  • Market share leadership
  • Product quality leadership
  • Marketing mix strategy
  • Costs
  • Organizational considerations
• External factors affecting pricing

  • Pricing in different types of markets
  • Consumer perceptions of price and value
  • Competitors Price and offers
  • Other external factors like economic position in the country, resellers reactions and government
• Product cost


  Costs involved in manufacturing goods or offering services, including raw material, direct labor, and factory overhead
• Operating expenses


  Costs of running a business, including rent, utility cost, office supplies, and marketing expenditures
• Competitors offer same product at lower price


  Consumers would patronize competitor's product, often leading to a price war
• Economic conditions


  Can have strong impact on consumer purchases, affecting pricing decisions
• Government laws and regulations


  May impose price changes, e.g. Sin Tax Reform Law increasing prices of alcohol and tobacco products
• Pricing strategies

  • The Psychology of Pricing
  • Competitor based pricing
  • Penetration pricing
  • Price skimming
  • Break-Even Pricing
  • Cost plus pricing
  • Value-based pricing
  • Dynamic pricing
  • Target costing
• Choosing the right pricing strategy strengthens the chance of achieving turnover and profit in line with company objectives
• 7Ps of Marketing Mix

  • Product
  • Promotion
  • Place
  • Price
  • People
  • Process
  • Physical evidence
• Product


  Tangible goods or intangible services that a company offers to meet the needs and wants of its target market
• Promotion


  Activities that businesses use to inform, persuade, and remind customers about their products or services, including advertising, public relations, sales promotions, and personal selling
• Place


  Making the product or service available to the target audience through appropriate distribution channels, including decisions related to location, logistics, and methods of product distribution
• Price


  Amount of money customers are willing to pay for a product or service, involving setting a price that covers costs, reflects perceived value, and remains competitive in the market
• Extended Marketing Mix

  • People
  • Process
  • Physical evidence
• People


  Employees, staff, or personnel involved in delivering the service and interacting with customers
• Process


  Systems, procedures, and activities that facilitate the delivery of a service and contribute to the overall customer experience
• Physical evidence


  Tangible elements that represent and support the service, providing visible cues to customers about the service quality
• Demonstrating customer value


  Showcasing the benefits and advantages that a product or service provides to customers
• Price-value equation

  Value = Perceived benefits - Perceived costs
• 7 ways to demonstrate value to customer

  • Share customer testimonials
  • Leverage competitor comparisons
  • Collect and apply feedback
  • Provide outstanding customer service
  • Gather and share social proof
  • Create content just for your customers
  • Build a customer community
• Psychology in pricing


  A strategy that uses pricing to influence a customer's spending or shopping habits to make more or higher-value sales
• Number nine pricing


  Pricing products with prices ending in the number nine due to the left digit bias, where consumers' perceptions and evaluations are disproportionately influenced by the leftmost digit of the product price
• Providing pricing options


  Offering customers a range of choices when it comes to the pricing of products or services
• Inviting price comparisons


  Presenting a company's price or service in a way that causes comparison with other products or services that have the same purpose or use
• Slashing the MSRP


  Presenting a product's price as a significant discount from the manufacturer's suggested retail price (MSRP)
• Importance of psychological pricing

  • Get an attention boost
  • Simplify the customer's decision-making process
  • Create a sense of urgency for the purchase
  • Increase returns on one-time sales
• Psychological pricing is crucial in marketing because it leverages human psychology to influence purchasing decisions
• Break-even pricing


  The practice of setting a price point at which a business will earn zero profits on a sale
• Fixed costs


  Expenses that do not change with the level of production or sales within a certain range, remaining constant regardless of the volume of goods or services produced
• Break-even price


  The price at which the cost to manufacture a product is equal to its sale price
• Break-even quantity


  The number of incremental units that the firm needs to sell to cover the total cost of the business
• Break-even analysis


  Important to business owners and managers in determining how many units (or revenues) are needed to cover fixed and variable expenses of the business
• Break-even pricing is the practice of setting a price point at which a business will earn zero profits on a sale, with the intention of using low prices as a tool to gain market share and drive competitors from the marketplace
• Competitive pricing


  A common strategy used by businesses to set prices for their products or services in a way that is competitive with the prices of their rivals, aiming to attract customers, increase market share, and maintain a competitive position in the market
• Pricing strategies

  • Pricing matching
  • Discount pricing
  • Penetration pricing
  • Premium pricing
  • Dynamic pricing
  • Bundle pricing
  • Value-based pricing
  • Profit-oriented pricing
  • Competitor-oriented pricing
  • Customer-oriented pricing strategy
• Pricing matching


  Setting prices equal to the prices of direct competitors to attract price-conscious customers
• Discount pricing


  Offering discounts on products to attract price-sensitive customers and compete effectively with competitors