4. Four views of price Economists view Price is set by the forces of supply and demand Accountant’s view Price should cover costs so that a profit can be made Customer’s view Price has to represent good value Marketer’s view Pricing is an opportunity to gain a competitive advantage
8. Some Pricing Objectives Financial Marketing Maximise profit Achieve a target level of profits Achieve a target rate of return Maximise sales revenue Improve cash flow Maintain/improve market share Beat/prevent competition Increase sales Build a brand
9. Methods, strategies and tactics Pricing method 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
14. Who takes the lead? Price takers Have no option but to charge 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
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16. Example of Cost Plus Pricing Total Costs for producing 10,000 units £100,000 Cost per Unit £10 Add mark-up 100% of cost £10 Selling price = cost + mark-up £20
28. Price quality matrix High price Medium price Low price High quality Premium strategy Penetration strategy Superb value Medium quality Overcharging strategy Average strategy Good value strategy Low quality Rips off strategy Cheap, flashy strategy Bargain price strategy
37. Promotional pricing and discounts Type of discount Who for? Cash For those who pay cash Quantity For customers who buy large volumes (bulk buying) Trade Intermediaries in the trade Seasonal For buying off peak or out of season Promotional Temporary pricing of products below list price to increase short run sales
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