marketingnotes - Marketing Review Outline Chapters 10-15...

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Marketing Review Outline Chapters 10-15 Chapter 10: Pricing: Understanding and Capturing Customer Value A. What is Price? -Amount charged for a product/service. $ given up by the consumer to gain benefit from product -Only element in the marketing mix that produces revenue. 2 B. Factors to Consider When Setting Prices *Customers perception of value -How much value cosumers place on the benefits they receive from the product and seeing a price that captures this value. (Ie the benefits outweighs the price of the good) Between the two extremes is the right pricing strategy. 1Value Based Pricing: uses buyers perception of value, not the sellers cost, to determine pricing. Price is considered before the marketing program is set. -Customer Driven -Asses customes needs and value perceptions. Set target price. Determines cost that can be incurred. Designs product to deliver desired value at targeted price. (charmin) #Cost-Based Pricing: product driven. They make a product,add up cost, and set a price. Needs to convince customers about products.(bently) 2Good Value Pricing: Quality and good service at fair price. Existing brands are being redesigned to offer more quality for a given prive or the same quality for less price. ( ie value menus, nordstoms rack,etc) 3-Everyday low prices vs High low prices 4Value added Pricing: To increase their pricing power, companies adopt this strategy. Rather than cutting prices to match competitors, they attach value added features and services to differentiate offers and support higher prices, and build pricing power. (stag umbrella at india as an example) 5 Cost Based Pricing: Involvrd setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk 6Adds a standard markup to the cost of the production 7Markup price=UnitCost/ (1-desired rate of return) 8TYPES OF COST: Fixed, Variable, Total 9Experience/Learning curve: avg cost falls as production increases cuz fixed costs are spread over more units 10Break-Even Pricing: the proce when total cost=Total revenue; Target Profit pricing: the price at which the firm will break even or make a profit. C.Other Internal and External Consideration Affecting Price Decisions CI.Customer Perceptions of value set upper lime, cost set lower limit; Companies must consider
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internal and external factors when setting prices CII.INTERNAL FACTORS CIII.Marketing Strategies (Target market & Positioning), Objectives, Marketing Mix,Cost, Organizational consideration CIV. 3. EXTERNAL FACTORS CV. 1. Market Demand, Competitors strategies and prices, other environemental factor (economy, resellers, government) CVI. 4. Target pricing: starts with an ideal selling price based on conusmer value consideration and then targets cost that will ensure that the price is met. 1. Non price statergy- Differentiating the item to make it worth a higher
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marketingnotes - Marketing Review Outline Chapters 10-15...

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