2. PRICING – CHAPTER 29 MARKETING

3. What is price? THE VALUE PLACED ON A GOOD OR SERVICE CAN BE MONETARY ($5.50) OR NON-MONETARY (GIFTS)

4. Why is price is important: o SUCCESS OR FAILURE OF BUSINESS o HELPS ESTABLISH IMAGE, COMPETITIVE EDGE, AND PROFITS  HIGHER PRICES = BETTER QUALITY  LOWER PRICES = MORE FOR YOUR MONEY o CAN BE MAIN MESSAGE IN ADVERTISING  “OFFER LOWEST PRICES” o HELPS DETERMINE PROFITS

5. MARKET SHARE DEFINITION: A BUSINESSES PERCENT OF THE TOTAL SALES VOLUME GENERATED BY ALL COMPETITORS IN A GIVEN MARKET EXAMPLE CEREAL INDUSTRY 35.5% KELLOGG’S 29.4% GENERAL MILLS 12.2% POST 22.9% OTHER Goals Of Pricing In addition to earning a profit, marketers are concerned with market share and return on investment

6. WHERE DOES A BUSINESS STAND IN RELATION TO COMPETITORS EXAMPLE: KELLOGG’S = #1 CEREAL GENERAL MILLS = #2 CEREAL POST = #3 CEREAL Market position

7. MEASURESMEASURES HOW EFFECTIVELY THE FIRM USES ITS CAPITAL TO GENERATE PROFIT; THE HIGHER THE ROI, THE BETTERFIRMUSESCAPITALPROFIT Return on investment SELLING PRICE – COST TO MAKE THE PRODUCT = PROFIT COST TO MAKE THE PRODUCT INVESTMENT

8. Your company sells socks for $8.00 each. Your costs to make and market the socks are $6.50 per unit. What is your return on investment? 23% $8.00 – $6.50 = $1.50 = ? $6.50 $6.50