Marketing Mix Flashcards
(29 cards)
What is price?
the money charged for the product/service
Stages of price setting
- Develop pricing objectives
- Assess of target markets ability to purchase
- Determine demand for product
- Evaluate competitors prices
- Select pricing strategy and tactics
-Decide on price
Financial objectives that will influence marketing
- Maximise profit
- Achieve a target level of profits
- Achieve a target rate of return
- Maximise sales revenue
- Improve cash flow
Marketing objectives that will influence pricing
- Maintain/improve market share
- Beat/prevent competition
- Increase sales
- Build a brand
Pricing methods
The method used to calculate the actual price set
Pricing strategies
Adopted over the medium to long term to achieve marketing objectives . Have a significant impact on marketing strategy
Pricing tactics
Adopted in the short run to suit particular situations
Limited impact beyond the product itself
Price takers
Have no option but to change the ruling market price
Price makers
Able to fix their own price
Price leaders
Market leaders whose price changes are followed by rivals
Price followers
Follow the price-changing lead of the market leader
Things business need to consider before setting the price
- Competitors products and prices
- Costs of production, promotion, etc
- Market conditions, for example, demand levels, accepted prices, market share, etc
- The state of the economy and its impact on consumers’ disposable income
Factors impacting on price charged
- The bargaining power of customers in the target market - Do they sell to consumers or businesses?
- Location of the business
- Brand image, reputation and customer loyalty
- Product quality and packaging
- Price elasticity of demand - Is the product elastic or inelastic?
Penetration pricing
a strategy used by businesses to attract customers to a new product or service by offering a lower price initially
Price Skimming
Setting the new products price as high and lowering them as competitors enter the market.
Early adopters
individuals that use new products before the majority of people. They are risk-takers and trendsetters and have a strong influence on the success or failure of a new product. It is for this reason many businesses seek to gain the approval of early adopters.
Price leadership
a leading firm in a given industry is able to exert enough influence in the sector that it can effectively determine the price of goods or services for the entire market
Price taking
an individual or company that must accept prevailing prices in a market, lacking the market share to influence market price on its own
Predator
the illegal business practice of setting prices for a product unrealistically low in order to eliminate the competition.
Premium pricing
the practice of keeping the price of one of the products or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price.
Seasonal pricing
- a revenue strategy that hotels use to set different room rates during particular periods of time throughout the year
Loss leaders
prices a product lower than its production cost in order to attract customers or sell other, more expensive products.
Psychological pricing
a way businesses set prices to influence how customers perceive the value of a product or service
Price discrimination
a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to.
