MRKT 341 Exam III

MRKT 341 Exam III - MRKT 341 Exam III Chapter 9 Price - the...

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MRKT 341 Exam III Chapter 9 Price - the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service Price and the marketing mix: - only element to produce revenues - most flexible element - can be changed quickly Price competition Common pricing mistakes Factors affecting price decisions General Pricing Approaches - Value based pricing o uses buyers’ perceptions of value rather than seller’s costs to set price o measuring perceived value can be difficult o business to business firms seek to retain pricing power value-added strategies can help o value pricing at the retail level everyday low pricing (EDLP) vs. high-low pricing o consumer attitudes toward price and quality have shifted during the last decade introduction of less expensive versions of established brands has become common 1. Assess customer needs and value perceptions 2. Set target price to match customer perceived value 3. Determine costs that can be incurred 4. Design product to deliver desired value at target price Types of costs: variable, fixed (overhead), total costs How costs vary at different production levels will influence price setting Experience (learning) curve effects on price - Cost Based Pricing (Cost Plus Pricing) o Adding a standard markup to cost o Ignores demand and competition o Popular pricing technique because: It simplifies the pricing process Price competition may be minimized It is perceived as more fair to both buyers and sellers
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1. Design a good product 2. Determine product costs 3. Set price based on cost 4. Convince buyers of product’s value - Competition – Based Pricing: o Also called going rate pricing o May price at the same level, above, or below the competition o Bidding for jobs is another variation of competition-based pricing Sealed bid pricing Factors to Consider When Setting Price - Marketing objectives o Marketing positioning influences pricing strategy o Not-for-profit objectives Partial or full cost recovery Social pricing o Other pricing objectives Survival Current profit maximization Market share leadership Product quality leadership - Marketing Mix strategies o Pricing must be carefully coordinated with the other marketing mix elements o Target costing is often used to support product positioning strategies based on price o Non-price positioning can also be used - Organizational considerations o Price negotiation is common in industrial settings o Some industries have pricing departments o Who sets the price? Small companies: CEO or top management Large companies: divisional or product line managers - Nature of market and demand o Types of markets Pure competition Monopolistic competition Oligopolistic competition Pure monopoly o Consumer perceptions of price and value o Price-demand relationship Demand curve Price elasticity of demand
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- Competitors’ strategies and prices
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MRKT 341 Exam III - MRKT 341 Exam III Chapter 9 Price - the...

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