General Pricing Approaches

• Pricing Approaches


  • Cost-based pricing
  • Competition-based pricing
  • Value-based pricing
• Cost-based pricing


  • Based on cost of producing, distributing, & promoting product
  • Adding mark-up
• Competition-based pricing


  • Benchmarks on competitor's product
  • Equal pricing method
• Value-based pricing


  • Based on perceived value of product
  • E.g. jewelry, skills
• Price Adjustment Strategies


  • Discount & Allowance Pricing
  • Segmented Pricing
  • Psychological Pricing
  • Promotional Pricing
  • Geographical Pricing
• Discount & Allowance Pricing

  Straight reduction in price of purchase
• Segmented Pricing


  Companies set different prices to consider behavioral & psychological factors
• Psychological Pricing


  • Uses customer's emotional response to encourage sales
  • Depends on behavior
• Promotional Pricing


  Adjusting pricing to entice customers buy during discounted price offering period
• Geographical Pricing


  Based on location
• Marketing Mix


  • Place
  • Promotion
• Promotion


  • Entire set of acts that communicate product, brand, & service to user
  • Company creates target market's AWARENESS, INTEREST, DESIRE, & ACTION (AIDA) towards product
• Types of Promotion Activities

  • Advertising
  • Sales Promotion
  • Personal Selling
  • Public Relation (PR) Acts
  • Direct Marketing
• Advertising


  • Non personal, paid communication that utilizes media
  • Printed - flyers, posters, tarpaulin, newspaper, magazine
  • Non-printed - word of mouth, commercial ads, radio promotion
• Sales Promotion


  • Personal /non communication
  • All marketing activities to boost sale in short term
  • E.g. Buy 1 take 1, tester, & freetaste, Midnight sale for dept store
• Personal Selling


  • Personal communication of sales rep w prospects
  • Direct selling
  • E.g. Insurance agents
• Public Relation (PR) Acts


  • Helps in managing communication between company & relevant public (shareholders, customers, & govt) for good relation
  • E.g. Seminars, workshop, training, For prospects to know more
• Direct Marketing


  • Non personal communication
  • Product speaks about itself
  • Augmented
  • E.g. Email blasts, telemarket, direct mail
• Promotional Mix


  Combination of promotional acts
• Place


  • Location where product can be bought
  • Decisions associated with distribution channel
• Functions of Distribution Channels

  • Providing info
  • Promotion
  • Financing
  • Matching
  • Negotiation
  • Physical distribution
  • Contact
  • Risk taking
  • Price stability
  • Title
  • Standardizing transaction
• Structure of Distribution Channels

  • Direct: Manufacturer -> Consumer (end user)
  • Indirect: Manuf -> wholesaler -> retailer -> customers
• Wholesaler


  Company that sells to business
• Retailer


  Company that sells to customers
• Supply Chain Management


  Supervision of materials, info, and finance as they move in process from supplier to manufacturer to wholesaler to retailers to customers
• Goals of Supply Chain Management

  • Shared efficiency
  • Optimized transportation & logistics
  • Quality improvement
  • Long term stability