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MT 219 Marketing Unit Six Marilyn Radu, Instructor Pricing Note: This seminar will be recorded by the instructor.
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Agenda Unit 5 review Pricing Questions
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Review of Unit 5 How did Unit 5 go? Questions or concerns? Instructor suggestions for Unit 6 Additional questions?
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What is Price? Value exchanged for products -Money -Barter Only primary source of revenue
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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
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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?
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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
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Pricing Objectives Survival- Not a good way to price unless necessary Profit maximization- Most companies “optimize” Target profit Market share leadership Product quality leadership
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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?
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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 )
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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?
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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
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Psychological Pricing Reference Pricing Odd vs. even pricing Multiple unit pricing Customary pricing Everyday low pricing Prestige pricing Bundle pricing Why so many?
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Promotional Pricing Price leaders Loss leaders Special event pricing
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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
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Pricing no-no’s Predatory pricing issues Dumping Other?
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Any Questions? Thank you for attending! See you next week!
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