Pricing - Pricing Products: Pricing Considerations and...

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Pricing Products: Pricing Considerations and Approaches – Ch 10 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. (money, barter) Dynamic Pricing on the Web allows SELLERS to: Monitor customer behavior and tailor offers. Change prices on the fly to adjust for changes in demand or costs. Aid consumers with price comparisons. Negotiate prices in online auctions and exchanges. (lower costs – B2B’de firmaların satın almalarını organize etmek, daha farklı kaynaklardan yararlanmalarını sağlamak) Price and the Marketing Mix: Only element to produce revenues Most flexible element ; price change is easy, making price change very fast should be dangerous, customer may feel there is a change in quality as well, Ex/ changing price of newspaper Cumhuriyet, will not change the number of customers. Can be changed quickly Common Pricing Mistakes Reducing prices too quickly to get sales Pricing based on costs, not customer value (some sectors must base on costs; construction, because they can’t calculate costs beforehand) Factors to Consider When Setting Price Internal Factors Marketing objectives Market positioning influences pricing strategy Other pricing objectives:
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Survival ; company tries to stay in business, they can even sell product at variable cost level. Company nothing to do with fixed cost in the short-term but they can work on variable cost. In survival period, anything higher than variable cost can be charged for that product Current profit maximization ; Ex/ skimming strategy, getting as much profit as possible charging a high price Market share leadership ; charge a lower price in order to reach market leadership Product quality leadership ; consumer perceives price to be indicator of quality, if you charge high price then consumer perceives this is high quality product Marketing mix strategies Pricing must be carefully coordinated with the other marketing mix elements Ex/ Smart cars are co-brand of Mercedes, Smart is marketed differently because its pricing strategy is different from Mercedes.Their images are different. Ex/Vestel and Regal both of them are produced by same company but Regal has lower price, Vestel has higher price their images, positioning, distributioning, pricing all different Target costing is often used to support product positioning strategies based on price Nonprice positioning can also be used Costs Types of costs: Variable , Fixed , Total costs How costs vary at different production levels will influence price setting How you price the product will the determine the quantity you sell.But the quantity that you sell will determine the cost structure : As quantity increases the unit price of production decreases.When we consider our profit structure, we’ve to consider which level we’ll be
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This note was uploaded on 10/01/2011 for the course MKT 702 taught by Professor Eminesozer during the Spring '11 term at University of Michigan.

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Pricing - Pricing Products: Pricing Considerations and...

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