Pricing ????

Clive Christian $795 Unknown brand $2-3 CK $60

Factors Affecting Pricing Policy
Factor affecting Price

Internal Factors External Factors

Marketing Objectives Market and Demand

Marketing Mix Competition

Cost
Other Environmental Factors

Organization Setup
External Factors Affecting Pricing Policy:

1.) Market and demand: cost set the lower limit of the price. While the
market and demand set the upper limit. So it is very necessary for the
marketer to keep in mind the relationship between price and market &
demand.
2.) Competition: pricing decision is affected by the act of competition.
The marketer must keep an eye on the activities of the competitor. Some
companies go for price leadership, while other goes for low pricing decision
to wipe of the competitors from the market.
3.) Other environmental factors: while deciding the price of the product
the company has to keep in mind the other environmental factors also like:

 Economic conditions of the country like boom, recession, inflation etc.

 Consumer perception regarding the product.
 Government policy also affects the pricing policy.
 Distribution channel also have an effect on the price of the product.
 Therefore all these are the important factors which affect the pricing
policy.
Pricing Strategies
 Cost-plus Pricing Strategy
● Advantage
● Cost + mark-up ● Easy to apply
● cost of
manufacturing
● Disadvantage
● plus a profit mark-
● If price is to high
up
than the rival
price, you may
lose sales
Competitive Pricing Strategy
● Price in line with ● Advantage
or just below rival ● Sales likely at high
● Aim to capture realistic level
more of the market ● not under or
overpriced
● Disadvantage
● Research
competitors
constantly to set
price
● costs time & money
 What would you suggest
the price in KSA
Penetration Pricing Strategy
● Advantage
● Used to enter a ● Ensures sales are
new market made
● Price lower than
the competitors
● Disadvantage
● Low price means
low profit
Price Skimming Strategy
● High price set for a ● Advantage
new product or ● helps establish
invention on the good product
market quality

● Disadvantage
● May put off some
potential
customers because
of the high price
Promotional Pricing Strategy
● Advantages
● Sold at low price ● Useful for getting
for short periods rid of the over
stocks
● Helps make
interest in the
business

● Disadvantage
● The sales revenue
will be lower
Psychological Pricing Strategy
● Could include
● Attention on the ● High price – High
effect of the price Quality
on the consumers → Status Symbol
perception of the ● Pricing just below
product whole number (e.g.
19,999)
→ Che aper
Impression
● Regular purchased
products at low
prices
→ value for money
What if the price of milk bottle
is 6 Riyal in Hyper Panda

What if the price of milk bottle

is 5.99 Riyal in another market
 DYNAMIC PRICING
In dynamic pricing, the price is not firmly set; instead it changes based on
changing circumstances, such as increases in demand at certain times,
type of customer being targeted or changing marketing conditions. This
type of pricing strategy is especially common in certain types of business,
particularly those providing a service, such as airlines, but can also be
used with product pricing. It is also called real time pricing.

 Airlines. The airline industry alters the price of its seats based on the
type of seat, the number of seats remaining, and the amount of time
before the flight departs. Thus, many different prices may be charged
for seats on a single flight.
 Hotels. The hotel industry alters its prices depending on the size and
configuration of its rooms, as well as the time of year. Thus, ski resorts
increase their room rates over the Christmas holiday, while Vermont
inns increase their prices during the Fall foliage season, and Caribbean
resorts reduce their prices during the hurricane season.
 Electricity. Utilities may charge higher prices during peak usage
periods
 PENTRATION
PRICING

PSYCHOLOGI
PRICE CAL
SKIMMING
PRICING

PRICING
STRATEGIES
COST PLUS PROMOTIION
PRICING -AL PRCING

DYNAMIC COMPETITVE
PRICING PRICING
 Which pricing strategy would you
use?
a) A watch that is very similar to other
watches sold in shops
 Which pricing strategy would you
use?

b) A new type of
Bluetooth stand
alone speakers
that has been
developed and is
of much higher
quality than
existing ones
Which pricing strategy would you
use?

c) A chocolate bar
which has been on
the market for
several years and
new brands are
being brought out
which are
competing with it.
 Which pricing strategy would you
use?

d) A shop, which sells

food, wants to get
its money back on
buying the stock
and make an extra
75 per cent as well.
Which pricing strategy would you
use?

e) A new brand of
washing powder is
launched (there are
already many
similar brands
available).
 Which pricing strategy would you
use?
f) Toys sold for $1.99 each

$1.99