MT 219 Marketing Unit Six Marilyn Radu, Instructor Pricing Note: This seminar will be recorded by the instructor.

Agenda Unit 5 review Pricing Questions

Review of Unit 5 How did Unit 5 go? Questions or concerns? Instructor suggestions for Unit 6 Additional questions?

What is Price? Value exchanged for products -Money -Barter Only primary source of revenue

Price vs. Non-Price Competition In price competition, competitors seek to match or beat the price of competitors The major advantage is flexibility in a parity product market The more a product is like a commodity, the more it is used In non-price competition, factors other than price are emphasized This is especially useful when a marketer has a unique product, and helps avoid price wars

Assessing Demand Demand refers to the quantity of product sold at a particular price over a particular period of time The demand curve graphs demand over a range of prices with other factors constant In most cases, demand goes up as price goes down The exception is prestige products. Why?

Price Elasticity Measures the sensitivity of demand to price changes If acceptable substitutes are available, markets tend to be elastic If not, they tend to be inelastic

Pricing Objectives Survival- Not a good way to price unless necessary Profit maximization- Most companies “optimize” Target profit Market share leadership Product quality leadership

Pricing Limits Costs set the “floor” for price Businesses can’t survive in the long term selling below cost Perceived value sets the “ceiling”- Why?

Pricing Bases Cost Plus and Markup pricing- Frequently used in retailing Demand or value based- Can vary depending on what customer can pay Competition based ( status quo )

New Product Pricing Skimming – set initial price high. Useful for unique products when competition cannot follow quickly. Where does the term come from? Examples? Penetration – set initial price low to capture as much of the market as possible before competition enters. Examples?

Product-Line Pricing Strategies Captive pricing- Often used for disposable items- water filters, air freshener replacements, etc. Premium pricing Bait pricing Price-Lining- Limited price points

Psychological Pricing Reference Pricing Odd vs. even pricing Multiple unit pricing Customary pricing Everyday low pricing Prestige pricing Bundle pricing Why so many?

Promotional Pricing Price leaders Loss leaders Special event pricing

Segmented Pricing Charging different segments different prices time based seasonal location based demographic basis ( senior citizen, student discounts) Pop machines that charge more on hot days

Pricing no-no’s Predatory pricing issues Dumping Other?

Any Questions? Thank you for attending! See you next week!