1. Pricing and Sales Promotion A Wrap Up MAR 331

2. Pricing and Sales Promotion A Wrap Up Marketing and Pricing –Price/Value Relationships –Role of the Distribution Channel Retailer vs. Consumer

3. Pricing and Sales Promotion Pricing can be temporary and permanent Deal prices - trade promotion –Provided to get and maintain distribution –Temporary price reduction given to trade –Sometimes passed on to the consumer

4. Consumer Pricing Regular pricing Temporary sales

5. Price Elasticity Customer sensitivity to price When a relative change in volume is more than the relative change in price, demand is described as elastic.

6. Price Elasticity If the price is cut by 1% and demand increases by 5%, the brand is very elastic. When demand is that sensitive to price, it pays to cut prices.

7. Price Elasticity Some products are not terribly sensitive to price When a relative change in quantity sold is less than the relative change in price, demand is said to be inelastic. When demand is inelastic, profits can be improved by raising prices.

8. Price Elasticity and Advertising An important part of your job as marketing manager is to make your brands less elastic Higher prices Little monopoly, more perceived differences

9. Breakeven BE = Fixed Costs divided by Mfr. Price less Variable costs What is the volume necessary to cover your costs Does NOT take the demand ceiling into account