1. PRICING
One of the 4 P’s

2. the value of money (or its equivalent) placed on a good or service
What is it?
the value of money (or its equivalent) placed on a good or service

3. understanding the value buyers place on a product
key of pricing
understanding the value buyers place on a product

4. importance of price
helps establish and maintain a firm’s image, competitive edge and profits
customers use price to make judgments
sometimes it’s the focus of a firm’s advertising strategy
helps determine profits

5. Goals of pricing Make a profit Gain market share
Make a profit
Gain market share
market share = % of total sales volume generated by all competitors in a given market
market position = relative standing in relation to the competitors
Achieve a certain return on investment (ROI)
Determines the relative profitability of a product
ROI = Profit
Investment
Meet the competition

6. Government regulations affecting prices
1. Sherman Anti-Trust Act of 1890
-outlawed monopolies (including price fixing)
2. Clayton Anti-Trust Act of 1914
-defined price discrimination: creates unfair competition
price discrimination occurs when a firm charges different prices to similar customers in similar situations
3. Robinson Patman Act of 1936
-strengthened the provisions of the Clayton Act
intended to help smaller retailers compete with large chain stores -

7. Characteristics of effective pricing
Realistic
Flexible
Competitive

8. psychological pricing
a set of pricing techniques used to create an image of a product and to entice customers to buy

9. 1. Odd pricing Prices ending in an odd Number ($9.99 & 19.95)
convey image of a bargain

10. 2. Even pricing
Prices ending in a “0” or even number ($12.00 & $34.84)
Convey image of quality

11. 3. Promotional pricing Prices are lowered for running sales
dollars off, % reductions, rebates, coupons, buy one get one free
Short-term technique

12. 4. Prestige pricing
Prices set high to convey an image of status & high quality
Examples:
Coach purses, Jaguar cars, Bose speakers

13. 5. Price Lining
Prices are set at different levels to indicate different quality levels for the same type of product
Gives customers options & allows them to choose features & value they want in a product
Examples: Refrigerators: $300, $550, $2,500