What is it the value of money or its equivalent placed on a good or service key of pricing understanding the value buyers place on a product importance of price helps establish and maintain a firms image competitive edge and profits ID: 671065
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Slide1
PRICING
One of the 4 P’sSlide2
What is it?
the value of money (or its equivalent) placed on a good or serviceSlide3
key of pricing
understanding
the
value
buyers
place on a productSlide4
importance
of
price
helps
establish and maintain a firm’s image, competitive edge and profits
customers use price to make judgments
sometimes
it’s the focus of
a firm’s advertising strategy
helps determine profitsSlide5
Goals of
pricing
Make
a profit
Gain
market
share
market share
=
% of total
sales volume generated by all competitors in a given market
market position
=
relative standing in relation to the competitors
Achieve
a certain return on
investment (ROI)
Determines the relative
profitability
of a product
ROI
=
Profit
Investment
Meet
the competitionSlide6
Government regulations affecting
prices
1.
Sherman
Anti-Trust Act of 1890
-outlawed
monopolies
(including price fixing
)
2.
Clayton
Anti-Trust Act of 1914
-defined
price discrimination
:
creates unfair competition
price
discrimination occurs when a firm charges different prices to similar customers in similar
situations
3.
Robinson
Patman
Act of 1936
-
strengthened the
provisions of the Clayton Act
intended
to help smaller retailers compete with large chain stores
-Slide7
Characteristics of effective pricing
Realistic
Flexible
CompetitiveSlide8
psychological pricing
a set of pricing techniques used to create an image of a product and to entice customers to buySlide9
1. Odd
pricing
Prices
ending in an odd
Number ($
9.99 & 19.95)
convey image of a bargainSlide10
2. Even
pricing
Prices ending in a
“0”
or even number
($
12.00 & $34.84)
Convey image of quality
Slide11
3. Promotional
pricing
Prices
are lowered for running sales
dollars
off, % reductions, rebates, coupons, buy one get one free
Short-term techniqueSlide12
4. Prestige pricing
Prices
set high to convey an image
of status & high
quality
Examples
:
Coach
purses, Jaguar cars, Bose
speakersSlide13
5. Price Lining
Prices are
set at different levels
to indicate different
quality
levels for the same type of
product
Gives customers options
& allows them to choose features & value they want in a product
Examples
:
Refrigerators:
$300, $550, $2,500