By: Imad Feneir

Overview # Definition of price. # Importance of Price. # Pricing objectives. # Factors Affecting Pricing. # Pricing strategies (Methods ). # Articles about pricing. # Samsung versus Apple. # Conclusion

Definition of price * The amount of money charged for a product or service. * The sum of all the values that consumers exchange for the benefits of having or using the product or service.

Definition of price * A value that will purchase a limited quantity, weight, or other measure of a good or service. * The amount of money needed to persuade someone to do something.

Importance of Price * Choosing the right pricing strategy strengthens the chance of achieving turnover and profit in line with company objectives.

Importance of Price * Often price creates a first impression of the quality of the product/service and other value based judgements come later.

Importance of Price * Controls in size of demand.

Pricing objectives *Partial cost recovery: A company that has sources of income other than from the sale of products may decide to implement this pricing objective. *Profit margin maximization: The company want to maximize the per-unit profit margin of a product.

Pricing objectives *Revenue maximization: The company want to maximize revenue from the sale of products. *Quantity maximization: Want to maximize the number of items sold.

Pricing objectives *Status quo: Want to keep your product prices in line with the same or similar products offered by your competitors . *Survival: Needs to price at a level that will just allow it to stay in business and cover essential costs.

Factors Affecting Pricing (i) Internal Factors: 1. Cost: The firm should consider the cost involved in producing the product. 2. The predetermined objectives: the marketer should consider the objectives of the firm.

Factors Affecting Pricing 3. Image of the firm: The price of the product may also be determined on the basis of the image of the firm in the market. 4. Product life cycle: The stage at which the product is in its life cycle in the market.

Factors Affecting Pricing 5. Credit period offered: Longer the credit period, higher the price and shorter the credit period, lower the price of the product. 6. Promotional activity: If the firm incurs heavy advertising and sales promotion costs, the pricing of the product should cover the cost.

Factors Affecting Pricing (ii) External Factors: 1. Competition: the firm needs to study the degree of competition in the market. 2. Consumers: The marketer should consider various consumer factors (the price sensitivity of the buyer, purchasing power, and so on).

Factors Affecting Pricing 3. Government control: Government rules and regulation must be considered while fixing the prices. 4. Channel intermediaries: The marketer must consider a number of channel intermediaries and their expectations.

Factors Affecting Pricing 5. Economic conditions: The marketer may also have to consider the economic condition prevailing in the market while fixing the prices.

Pricing strategies (Methods ) # Competitive pricing: Pricing your product(s) based on the prices your competitors have on the same product(s). # Penetration pricing: Used to gain entry into a new market and to get market share.

Pricing strategies (Methods ) #Premium pricing: Employed when the product you are selling is unique and of very high quality. #Skim pricing: Used on products that are new and have few, direct competitors when first entering the market.

Pricing strategies (Methods ) #Product bundle pricing: Used to group several items together for sale. #Cost based pricing: To calculate product cost you need to include the costs of production, promotion and distribution and add the profit level you want.

Pricing strategies (Methods ) #Customer based pricing: Business owners should be know "at which price make their customers thinks their product offers good value”? #Psychological Pricing: used to play on consumer perceptions.

Articles about pricing * A Review of the Effect of Pricing Strategies on the Purchase of Consumer Goods Dudu, O.F. and Agwu, M. E. (2014) Purpose: This study examined the effect of pricing strategies on the purchase of consumer goods. Methodology: The research intended through review of the literature to answer questions on the extent to which competitor's price affects purchase of products and how customers perceive the value-based pricing concept of firms.

Findings: 1- Price is the most flexible element in marketing strategy Findings: 1- Price is the most flexible element in marketing strategy. 2- The pricing strategy used for a product says a lot about the product affects on the purchase decision process of the consumer. 3- Most organizations, use more than one pricing strategy which makes it is even more flexible. 4- Price is important to both the buyer and seller.

Wenhui Z., Xiuli C. and Xiting G. (2014). * Optimal Uniform Pricing Strategy of a Service Firm When Facing Two Classes of Customers. Wenhui Z., Xiuli C. and Xiting G. (2014). Purpose: This study addresses the optimal uniform pricing problem of a service firm using a queuing system with two classes of customers. Methodology: They consider a firm that provides a service to a market. There are two classes of potential customer. Different system parameters can lead to completely different pricing strategy for the firm.

Findings: 1- The potential pool of customers plays a central role in the firm’s optimal decision. 2- The firm cannot or is not allowed to set discriminatory prices. 3- The potential market structure plays a key role for the firm. 4- The firm has to be fully investigated and understood before the firm makes the pricing decision. 5- the optimal selling price of a firm is not always monotone in the potential market size or the arrival rates of potential customers.

* Pricing strategies with reference effects in competitive industries. Brian C. and Srini K. (2014) Purpose: This paper examines the effect of reference prices on companies operating within competitive industries. Methodology: This paper considers the optimal pricing strategy for firms in competitive industries subject to reference price effects and the advent of competition leaves pricing strategies qualitatively unchanged.

Findings: 1- Firms that use comparative data to evaluate pricing managers’ achievements may reach to incorrect conclusions. 2- Companies that price optimally to utilize reference prices may earn disproportionately “small” rewards for their actions. 3- More long-term focused firms may generate “lower” profit than their competition.

Samsung versus Apple # Apple : - Premium and Skimming pricing strategy. - Primary objective, sell a great phone and provide a great experience. - Offer a small number of products. - Give priority to profits over market share. - Create a halo effect that makes people starve for new Apple product.

Samsung versus Apple # Samsung : - Skimming strategy for the main product (Galaxy S) to gain the upper hand over their competitors. - Competitive strategy when other competitors launch a smartphone. - Penetration strategy for other products from smartphones. - Permanent diversity of products to control the market.

conclusion - To choosing a pricing objective and a related strategy requires you to carefully consider your business and financial goals. - You want to select objectives and strategies that will position your product and business for success. - You can to change your objectives and employ different strategies in the future as your business grows or changes.