Chapter 10 - 10 PrinciplesofMarketing PricingProducts:

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Pricing Products: Understanding and Capturing  Customer Value 10 10 Principles of Marketing
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Learning Objectives After studying this chapter, you should be able to: 1. Answer the question “What is price?” and discuss  the importance of pricing in today’s fast-changing  environment 2. Discuss the importance of understanding customer  value perceptions when setting prices 3. Discuss the importance of company and product  costs in setting prices 4. Identify and define the other important internal and  external factors affecting a firm’s pricing decisions 10-2
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Chapter Outline 1. What Is Price? 2. Factors to Consider When Setting Prices 10-3
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What Is Price? Price  is the amount of money charged for a  product or service. It is the sum of all the  values that consumers give up in order to  gain the benefits of having or using a  product or service. Price  is the only element in the marketing mix  that produces revenue; all other elements  represent costs 10-4
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Factors to Consider When        Setting  Prices Effective customer-oriented pricing involves  understanding how much value consumers  place on the benefits they receive from the  product and setting a price that captures that  value 10-5 Customer Perception of Value
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Factors to Consider When         Setting  Prices Customer Perception of Value Value-based pricing  uses the buyers’  perceptions of value, not the seller’s cost, as  the key to pricing. Price is considered before  the marketing program is set. Value-based pricing is customer driven Cost-based pricing is product driven 10-6
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Factors to Consider When        Setting  Prices Customer Perception of Value Value-based pricing Good-value pricing Value-added pricing 10-7
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Factors to Consider When        Setting  Prices Customer Perception of Value Good-value pricing  offers the right  combination of quality and good service to  fair price Existing brands are being redesigned to offer  more quality for a given price or the same  quality for less price 10-8
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Factors to Consider When        Setting  Prices Customer Perception of Value Everyday low pricing (EDLP)  involves charging a  constant everyday low price with few or no  temporary price discounts High-low pricing  involves charging higher prices on an  everyday basis but running frequent promotion to  lower prices temporarily on selected items 10-9
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This note was uploaded on 04/08/2011 for the course BUS 312 taught by Professor Wittenberg,h during the Spring '08 term at University of Hawaii, Manoa.

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Chapter 10 - 10 PrinciplesofMarketing PricingProducts:

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