PowerPoint Slides to accompany Rix Marketing: A Practical Approach 7e

Bargain! You Get What You Pay For Rix Marketing: A Practical Approach 7e Next: What is Price? Chapter Ten: Pricing Strategies

What is Price? Marketers give a special meaning to the term price: The money value of an item What you pay for what you get Marketers give a special meaning to the term price: Tangible aspects quantity, quality, performance and features Intangible aspects status, approval, security, peace of mind Rix Marketing: A Practical Approach 7e Next: Strategic Price Setting Chapter Ten: Pricing Strategies Learn more on pages 348 - 349

Strategic Price Setting Stage 1: Set a pricing goal Profit-oriented Sales-oriented Status quo-oriented Stage 2: Consider costs, demand and competitors Estimate sales around the expected price Consider marketing mix elements Stage 3: Set the base price Cost-based Demand-based Competition-based Stage 4: Adjust the base price Entry price Discounts and allowances Freight charges Fixed or flexible pricing Price lining Psychological pricing Loss leaders Recommended retail price Rix Marketing: A Practical Approach 7e Next: Pricing Goals Chapter Ten: Pricing Strategies Learn more on page 349

Pricing Goals Profit oriented goals maximise gross profit achieve target ROI Pricing Goals Status-quo goals stabilise prices meet competition ‘don’t rock the boat’ Sales oriented goals achieve target sales volume achieve target market share Rix Marketing: A Practical Approach 7e Next: Factors Influencing Price Chapter Ten: Pricing Strategies Learn more on pages 350 - 352

Factors Influencing Price Before setting a base or list price marketers need to consider: Demand factors expected price range elasticity of demand other marketing mix elements Cost factors fixed and variable costs total cost at different volumes Competitive factors are we a price maker or price taker? Rix Marketing: A Practical Approach 7e Next: Elasticity of Demand Chapter Ten: Pricing Strategies Learn more on pages 352 - 360

Elasticity of Demand Rix Marketing: A Practical Approach 7e Next: Product Cost at Various Levels of Output Chapter Ten: Pricing Strategies Learn more on pages 354 - 356

Measuring Product Cost at Various Levels of Output Rix Marketing: A Practical Approach 7e Next: Setting Base Price Chapter Ten: Pricing Strategies Learn more on pages 358 - 360

Setting Base Price In practice, marketers set their base (or list) price by: Adding a profit margin to cost Estimating demand (how many will sell) at various prices Pricing above, below or the same level as their competitors’ prices Rix Marketing: A Practical Approach 7e Next: Break-even Analysis: A Useful Tool Chapter Ten: Pricing Strategies Learn more on pages 360 - 370

Break-even Analysis: A Useful Tool Rix Marketing: A Practical Approach 7e Next: Marketing Pricing: Price Skimming Chapter Ten: Pricing Strategies Learn more on pages 365 - 366

Market Entry Pricing: Price Skimming Setting price at or above our most expensive competitor price and highest customers’ expected price. Can establish a premium image Gives price flexibility Works best when: new product is distinctive demand is inelastic PLC is in the early stages patents or other technology protect the product Rix Marketing: A Practical Approach 7e Next: Marketing Entry Pricing: Penetration Pricing Chapter Ten: Pricing Strategies Learn more on pages 370 - 371

Marketing Entry Pricing: Penetration Pricing Setting a price below our cheapest competitor price and lower level of customers’ expected price. Can achieve fast high-volume sales Discourages competitors Works best when: demand is elastic economies of scale are possible strong and fast competition is expected Rix Marketing: A Practical Approach 7e Next: What Kind of Discount is This? Chapter Ten: Pricing Strategies Learn more on page 371

Price Adjustment Strategies Discounts and allowances Marketers adjust their base prices in various ways: Discounts and allowances quantity discounts trade discounts settlement discounts promotion discounts Geographic pricing ex-factory uniform delivered zone delivered freight absorption Other pricing tactics flexible pricing price lining odd pricing loss leader pricing recommended retail price Rix Marketing: A Practical Approach 7e Next: What Kind of Discount is This? Chapter Ten: Pricing Strategies Learn more on pages 371 - 382

What Kind of Discount is This? Rix Marketing: A Practical Approach 7e Next: Changing prices Chapter Ten: Pricing Strategies

Changing Prices Marketers change their price in order to:   Marketers change their price in order to: Recover cost increases Clear excess stock Win market share Promote particular products Achieve sales budgets Marketers need to consider competitor motives and reactions when making or responding to price changes. Rix Marketing: A Practical Approach 7e Next: Five Minute Quiz Chapter Ten: Pricing Strategies Learn more on pages 382 - 383

Five Minute Quiz Define price from a marketing perspective List three common pricing goals Define price elasticity of demand List four types of discounts offered by firms List four alternative ways of allowing for freight costs in a firm’s price Rix Marketing: A Practical Approach 7e Chapter Ten: Pricing Strategies