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

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

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

15. 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

16. 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