1. Pricing strategy Chapter 2

2. summary
Pricing decisions characterized by a high degree of complexity because of the many variables contained and its reflection on the overall activities of the organization, thus significantly affected the marketing strategy pricing strategy
Price is one of the more elements Subject to negotiation between the seller and the buyer and the difference in their grades and their purchasing power.
Also highlights the impact of the alternative price for the same item on the final purchase decision for the consumer, and thus its transformation into a deal with competitors instead of keeping it within the circle of loyalty to the company or the product provided to the market.

3. Introduction Chapter contents:
Multiple meanings of price and its definition.
The price strategic role in marketing mix.
Pricing strategy adopted by business organizations.
The main factors of influence on pricing decisions.
successive steps in the Pricing process.

4. The concept and definition of price
"Expression of the value of things being exchanged in the market."
"Exchange value for marketing products in exchange."
Form the two previous definitions we find that the price is just a formula for the reciprocal relationship between individuals who pay the money, and the marketing of units of various forms and that the process of providing products to them.
"The price in exchange for something." (Money)
"A set of values (money), which replaces the consumer in exchange for benefits or possession or use of a product or service." (Monetary power of the consumer)
Its forms: fees, interest, rent, etc

5. The concept and definition of price
The price is the most prominent elements of the marketing mix in the organization:
For being a generator of revenue and profits, while the rest of the marketing mix elements are considered costs.
For being more flexible and responsive to change depending on any emergency in the environment surrounding the organization, while the rest of the elements would need long time and complicated procedures to be changed.
It occupies price and competitive prices first rank in terms of difficulty and problems faced by marketing managers of organizations because of their significant impact on the sustainability of the organization and its continuation and to achieve profits or vice versa.

6. Photos Rates Reciprocity process For goods / services Price
Versus the benefit of education
Tuition
Versus the benefit of borrowing
Interests
Versus the benefit of housing
Rent
Versus the benefit of transport
Fare
Versus the benefit of a lawyer
Fee
Employee
Salary
Worker
Wage
Broker or broker service
Commission
In exchange for participation in the phone, for example,
Dues
In the case of violation of traffic
Fine
Versus Maitre Services
Tips
As the price of the services provided by the government to citizens
Taxes

7. The strategic role of price
Even in 1950 the price was the most important factor in the behavior of the buyer.
Other factors: advertising, packaging and packaging appeared, the mark .....
Price returned impact due o decrease in demand 1980 and real income, so counting the price of the most important elements of marketing mix after the product mix.
Price is an important factor to cover the costs of activities (marketing and non-marketing).
Profit = total return the total costs
  =(Price * quantity sold) - the total costs
Price could affect the profits realized by many ways.

8. The strategic role of price - continued
Price takes a strategic dimension in each of the following:
When formulating pricing decisions should cover all the objectives and strategies set out in advance by senior management in the organization.
Systems theory and correlation of price-making decisions related to marketing mix elements.
Taking into consideration the importance of non-price competitive elements.
Price decisions taken must take into account the cases to make sure and make sure non-interconnecting.
Take strategic decisions formulated routine interaction and consultation with the departments and the relevant authorities to provide the product in its final form.

9. Pricing process steps
1. Identify the goals Pricing
(Survival, maximize profits, expand the current yield, to maximize the sales growth, the leadership of product quality, price and other targets)
2. Identification of factors affecting pricing
3. Pricing policies
4. To identify ways Pricing
5. Rose determine consumer reaction to the market price
6. monitoring and correction of the market price

10. First, the objectives of pricing:
Pricing for survival
Where the company's goal at this stage is to withstand and survive in the market because of their exposure to severe competition or difficult circumstances, and here the company can accept to bear the economic loss, but on condition that the cover price of all variable costs and part of the fixed costs and so the company remains in the market does not get out of it.

11. 2. pricing in order to increase current earnings
Of the important goals for companies is to maximize current profits and cash flows as well as the increase
3. Pricing in order to increase market share
And it is intended here that the company wants to achieve leadership in market share by lower prices, and this will increase the company's sales rate compared to the competitors' sales of the same item.

12. 4. Pricing in order to lead in quality
Some companies want to be the leader or the leader of the market so as to provide the highest quality products and it can determine the price at which it is achieve that.
5.The goal of the current status / non-competitive pricing
In this case the company is in an ideal situation for her in terms of price and sales and not searching for what is more, and thus the goal of pricing in this case is to preserve the status quo.

13. Second, identify the factors affecting the pricing decisions:
These factors are divided into two groups
External or environmental factors
Internal factors

14. 1. External or environmental factors
They include:
Excite the consumer on price
Consumer awareness of the price (does he know the price, what are the expectations for the price, how the link between price and quality)
Consumer response to alternative levels for the price (for the price of consumer demand, price elasticity of demand)
Raise wholesale / retail trade.
Focus on inter dealers and retail are willing to accept the proposed price and adhered to.
Follow the franchise in the retail policy to ensure uniformity in pricing policies.
Awarding wholesalers and retailers who are committed to the proposed list of prices.

15. Legal effects. Competition.
Price limits imposed by the state on certain goods.
Government intervention by issuing special laws importation of certain goods and customs duties.
  Competition.
Full competition (a large number of buyers and a large number of vendors and therefore quasi-uniform price).
Monopolistic competition (a large number of buyers and a large number of vendors, but excellence is in service, the place, the physical environment .....).

16. Competition oligopoly (few sellers, and therefore can determine the price at which the product fit in such as iron and steel industry, communications ....)
Monopolistic competition full (one seller is the one who determines the price, such as the electricity company, mail, water ....)
Economic conditions.
Stages of the economic cycle (recession, recovery, recession, boom).
Inflation (prices are high and a focus on quality).
Depression (consumer prices fall because it becomes sensitive for prices)

17. 2. Internal factors. They include: Pricing targets. Costs.
Stay, market leadership, profit, quality
Costs.
Determine the cost structure (fixed costs, variable, College)
Price must cover the costs of production, distribution and promotion in addition to a reasonable profit margin.
The administration's policy.
We may see that the senior management in the new product introduction phase must be at a low price for the burning of the market, or vice versa, and this affects pricing decisions.

18. Third, pricing policies:
Skimming market policy.
Market penetration policy.
Psychological pricing policy (psychological)
Professional pricing policy.
Promotional pricing policy.
Geographical pricing policy.
Discount rate policies.
Price discrimination policy.
Product line pricing policy.
Range of goods pricing policy.

19. Skimming market policy.
This policy will be followed in determining the maximum price of the product in order to obtain the maximum profit possible in the short term.
This policy is usually used in the case of new products that provide the market for the first time or if the goods substantially modified or in case of distinctive goods on goods competitors.
What followed, such as Nokia company in the introduction of new products and new forms, their specifications.
But it notes that this policy is short-term, as a marketer is forced after a period of time to reduce the price because of the entry of competitors into the market.

20. 2. Market penetration policy (to be able)
Rely on to define the low price of the product to enable the organization to achieve large sales volume.
This policy assume the elasticity of demand for the commodity, where lower prices lead to a significant increase in sales volume.

21. Psychological pricing policy.
It provides psychological price on the basis of pay to the consumer making a purchase as a result of emotional reaction than on the basis of logical thinking.
This policy is often used in consumer market and of these policies:
Fractional prices (9.99)
Boasting prices (prices Avatar) and are very high prices, which are given intimation or boast high level of quality and this policy used in the fashion products and luxury goods.

22. 4. vocational pricing policy.
Consumer needs sometimes product or service does not know much about it, and therefore does not know the prices.
Due to the lack of ability to do without it having to pay any price to get them.
Such as legal services, financial consulting, doctor, ..
And here there are two policies:
Literary Pricing (moral) and is used when demand is inelastic and be professionals seller the price depends here on the standard literary and moral.
Polite Pricing: request and is different prices for the same product or service by circumstance or consumer case. (what you pay)

23. 5. promote pricing policy.
Pricing, which is the goal of which is to work to promote and stimulate sales. Example of:
Phishing rate policy: the pricing of products known in the market at a lower price than the market price.
Special occasions rate policy: such as the end of the season for seasonal goods.
Sycological discount policy (compare prices): Goods Shop, where the old price and the new price.

24. 6. policy of geographical pricing.
The price based on who bears the transportation costs.
The most important policies:
Prices geographical consolidated: as they bear the transport cost of the product so that consumers pay the same price for a commodity regardless of their geographical location.
FOB: Free rate policy on Board: in this case, the buyer shall bear the cost of transportation and be selling prices by the factory.
Prices zone: where the market is divided into several areas of the company and bear the cost of transport to the different regions and bear that cost on the price of that area are.

25. Discount rates policy
Those policies are based on sales and adjusted to compensate for some of the functions or marketing activities or to encourage the purchase in large quantities or prices accelerate payment. And including:
Commercial Discount: they give a peer perform marketing functions such as transportation and storage intermediaries.
Quantitative discount: peer and given purchase in large quantities and be in two forms:
Quantitative non accumulated discount is: where is granted if the increased quantity purchased per transaction for a certain value.
Quantitative accumulated discount: it gives if increased purchase quantity during a certain period of time or for a certain amount of value.
Cash discount: gives this discount when selling term and that to encourage the payment speed before the maturity date (4-10 net 60).

26. 8. The policy of discrimination in the prices
This policy is based on the submission of a single product or service at different prices to various market segments in the market.
And the difference in price is determined on the basis of each consumer the ability to bargain.
And also based on the degree of competition in the market.

27. 9. pricing policy of line products.
When using this policy should examine the relationship between the products if the products are complementary to each other. And including:
Restricted Pricing: I mean, the basic pricing of the product at a low price, while pricing the product needed to run it or enhance his performance at a very high.
Such as razor pricing at a low price, but the high price of razor blades.
Measuring device such as sugar in the blood device pricing at a low price and high-price of slides.
Diverse pricing: is put a specific number of prices of selected groups of products based on the names of brands or models similar in quality ..
Such as in clothing stores suits pricing 250 LE LE. 500 LE.

28. Encouraging pricing: may contain product line on the models and some models are characterized by high quality and high price, and there may be models of less quality and low price to attract the customer sensitivity to price.
And this strategy is often used in electrical and household items.

29. 10. The range of goods pricing policy.
The large number of organizations producing and marketing more than a product.
According to the modern concept of marketing this organization price some goods which produced by the same cover and the same price bought by the consumer as a single group.
Often used this method for the disposal of slow-moving products with fast product turnover.
Such as Shampoo and Conditioner.

30. Fourth, determine pricing methods
After selecting strategies and pricing policies in light of the organization's goals and reactions of competitors, the marketing department must decide how you will follow in setting prices for their products.
And pricing method is procedures that are followed to determine the price based on a known base. The most important of these methods:
Pricing on the basis of cost.
Pricing based on the break-even point and the targeted profit.
Pricing on the basis of value (perceived benefit)
Pricing on the basis of the market (competition)

31. 1. Pricing on the basis of cost added:
Is Pricing per unit of the product at a price equal to the cost per unit plus the desired profit ratio.
For example, "I suppose that there is a commodity product for iron and that the product is expected the following:
Variable costs 10 pounds.
Fixed costs 300,000 pounds.
Number of sells expected 50,000 iron.
Product wants to achieve a profit margin in addition to the cost of 20%
what is the price of iron in the market?

32. The cost per unit = variable costs + (fixed costs /sells units)
so the cost of one unit= 10 + (300000/50000) = 16
so the unit price = cost per unit / (1-desired profit margin)
And equal to = 16 / (1-20%) = 20 pounds
And this way is considered to be one of the easy ways, but it has several drawbacks, including:
It does not take into account the demand.
Subject to personal estimate.
Require existence of effective and correct system to calculate the cost.

33. 2. Pricing based on the equivalent point and the target profit
This method also based on determine costing, as the company is trying to estimate the price here, which will bring it profits
It can calculate the target profits or wanted by using the equivalent point.
The equivalent point is the quantity of which are equally in it the revenue with total costs.
Accordingly, there is a multiple equivalent points at different price levels for the same product.

34. 3. Pricing based on quantity (perceived benefit)
Many of the organizations products are priced on the basis of the perceived benefit.
As unequaled price benefit that the consumer sees the acquisition of the commodity and not based on the cost of the good or service.
For example, a cup of coffee at home may not cost 0.5 pounds while in COFFEE shop could cost 5 pounds and at a five star restaurant could cost 15 pounds.
And the consumer is willing to pay these prices, but differentiated by utility that wants to get them.

35. 4. Pricing on the basis of the market (competition)
Price is determined by this way according to the demand for products in the market, as well as the supply of those products and not according to cost considerations.
And the importance of adopting this method appear in the event of increased competition in the market.
And there are situations where the use of this method is preferred:
In the case of homogeneous commodities such as foodstuffs.
With the flexibility of high demand where goods affects simple in price on sales significantly change.

36. Fifth, determine consumer reaction:
Consumers reactions can be measured for the price by identifying the degree of satisfaction or non-satisfaction of the consumer - the user - the beneficiary for the item price or service.
And it can be identified consumer trends on prices through the impact of price changes on sales volume or activate the presentations of sales or advertising sales, and others.

37. Sixth: price controls Price controls is through the following steps:
Is the sales objectives have been achieved or not?
Does the price is the reason not to check in reducer sales goals?
Identify the reactions of consumers about prices.
The appropriateness of discounts granted in comparison with competitors.
Change in product prices.
Over the marketing mix strategy Consistency such as product planning, distribution, promotion with pricing.