Internal factor affecting price decision

Marketing objectives
v

Market positioning influences pricing strategy

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Marketing mix strategies

v Pricing must be carefully

coordinated with the other marketing mix elements.

v Target costing is often used to

support product positioning strategies based on price.

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Costs
Types of costs:
vVariable vFixed
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Organiz
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External Factors Affecting Pricing Decisions

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Market and Demand Factors Affecting Pricing Decisions

Pricing in Different Types of Markets
Pure Competition Many Buyers and Sellers Who Have Little Effect on the Price Monopolistic Competition Many Buyers and Sellers Who Trade Over a Range of Prices

Pure Monopoly Single Seller

Monopolistic Competition Many Buyers and Sellers Who Trade Over a 5/3/12 Range of Prices

Cost-Based Pricing
Certainty About Costs Pricing is Simplifie d Price Competiti -on Is Minimize d Much Fairer to Buyers &

Cost-Plus Pricing is an Approach That Adds a Standard Markup to the Cost of the Product.

Simplest Pricing Method

Ignores Current Demand & Competition

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Competition-Based Pricing
Setting Prices

Going-Rate Company Sets Prices Based on What Competitors Are Charging.

Sealed-Bid Company Sets Prices Based on What They Think Competitors Will Charge.

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Competitions Prices Affect Our Price

What are our competitors charging? How and Why? Will our pricing attract, restrict, or drive out competitors? How does our value compare to the competitions? How strong/permanent are current competitors? How does competition influence price sensitivity? Avoiding price wars

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