Comm 296 - Chapter 10 (Lecture)

Comm 296 - Chapter 10 (Lecture) - Comm 296 Chapter 10...

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Comm 296 Chapter 10 Lecture PRICING - Price: only mix tool that generates revenue - A highly visible tool - Not only for accounting – key marketing function - Most flexible of marketing mix o Can be changed and implemented very quickly - Indicator of quality in absence of other information - An art, not a science - Total value customers will exchange for the benefit of having/using the product Major Pricing Strategies 1. Customer value-based pricing: - Setting prices based on buyer’s perceptions of value rather than the seller’s cost 2. Cost-based pricing: - Setting prices based on production, distribution and selling costs at a fair rate of return 3. Competition-based pricing: - Setting prices based on competitors’ prices, strategies, costs Considerations in Setting Price - Price ceiling (no demand above this price) – customer perceptions of value - Other internal and external considerations – competitors prices; marketing strategy, objectives, mix; nature of market and demand - Price floor (no profits below this price) – product costs - Value-based pricing versus cost-based pricing o Value based: assessing customer needs and setting price to determine maximum cost – what customer will pay – will deliver good value Customer Value-Based Pricing - Customer value-based pricing: o Price is considered along with the other marketing mix variables before the marketing program is set Target price is based on customer needs and value perception
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Comm 296 - Chapter 10 (Lecture) - Comm 296 Chapter 10...

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