Pricing Marketing 1

TREAT – Customer Service Trust – provide what was promised Responsiveness – willingness to help customers promptly Empathy – degree of caring and individual attention you show to customers Assurance – ability to convey trust and knowledge Tangibles – physical facilities & equipment, employees appearance

What is Price? The value in money (or it’s equivalent) placed on a good or service Usually expressed in monetary terms May also be expressed in non-monetary terms such as exchanging goods or services for a product or service The Barter system is the oldest form of pricing

Price Establishes for the company Firms Image Competitive Edge Profits

Price Goals Make a Profit – Number 1 Goal! Gaining Market Share Compete/Meet with the Competition

Price Strategies Psychological Pricing– pricing technique that helps create an illusion for customers. (Ex. Price ending in odd numbers $.99 or $.95) Prestige Pricing– strategy to set higher than average pricing to suggest status and high quality.(Ex. Rolls Royce, Rolex watches, Waterford crystal) Promotional Pricing – strategy used in conjunction with sales promotions where prices are reduced for a short period of time Volume Pricing or EDLP (Everyday low prices) – a retailer is able to pay lower prices for its merchandise due to the volume pricing it receives from it suppliers.

Price Strategies Psychological Pricing– pricing technique that helps create an illusion for customers. (Ex. Price ending in odd numbers $.99 or $.95)

Price Strategies Prestige Pricing– strategy to set higher than average pricing to suggest status and high quality.(Ex. Rolls Royce, Rolex watches, Waterford crystal)

Price Strategies Promotional Pricing – strategy used in conjunction with sales promotions where prices are reduced for a short period of time

Price Strategies Volume Pricing or EDLP (Everyday low prices) – a retailer is able to pay lower prices for its merchandise due to the volume pricing it receives from it suppliers.

Price Vocabulary Price Fixing– Occurs when competitors agree on certain price ranges within which they set their own prices. Market Share- a company’s percentage of total sales volume generated by all competition in a given market. Return on Investment (ROI) – a calculation used to determine the relative profitability of a product.

Price Vocabulary, continued Break-Even Point– Point at which sales revenue equals the costs and expenses of making and distributing a product. Bait and Switch – advertising strategy that consists of a low price on an item that they have no intention of selling.

4 Factors that affect Price Costs & Expenses Supply and Demand Consumer Perceptions Competition

Customer Perception Customer’s perceived value makes the difference in how much they will be willing to pay Value is anticipated satisfaction of the customer If consumer believes they will receive higher satisfaction they will be more willing to pay higher price

Key Factors In Determining Price Internal Factors and External Factors help determine price!

Difference in Pricing Good and Service Internal Factors Cost of Goods Operating Expenses Product Quality, Trendiness External Factors Supply & Demand Government Regulations Competition Natural Events (Disasters) Economic Events (Recessions)

Difference in Pricing Good and Service Pricing Goods Manufacturing Shipping Packaging Storage Costs Pricing Services Labor Related Product Costs Related Equipment Costs

Summary Price is the value in money (or non-monetary exchange) for the exchange of a good or service Customers’ perception of value of product determines their willingness to pay that exchange Seller must be able to gauge customer perception and price to generate profit but meet customer expectation Pricing is determined by internal and external factors Goods and services have different considerations for pricing Pricing is KEY to business success or failure