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MKT 101 Chap 10
MKT 101 Chap 10
MKT 101 Chap 10
Principles of Marketing
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Price
Price is the sum of all the values that consumers exchange for the benefits of having or using the product or service. has been the major factor affecting buyer choice; non-price factors have become increasingly important in buyer-choice behavior. is the only element in the marketing mix that produces revenues; all others represent costs.
Price
Price
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New product Regular product in new channel New bids & contract
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Mkt. strategy, Objectives and mix Nature of the market and demand
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Value-Based Pricing
Good-Value Pricing:
Offering just the right combination of quality and good service at a fair price.
Value
Added Pricing:
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Attaching value-added features and services to differentiate a companys offers and to support charging higher prices.
Settin g Prices
Going -Rate
Compa ny Sets Prices Based on What Compe titors Are Chargi ng.
.
Competition-Based Pricing
Compa ny Sets Prices Based on What They Think Compe titors Will Charge
Seale d-Bid
? ?
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Costs that dont vary with sales or production levels. Executive Salaries, Rent
Variable Costs
Costs that do vary directly with the level of production. Raw materials
Total Costs Sum of the Fixed and Variable Costs for a Given
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Cost-Based Pricing
Expected Variable
unit
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Cost-Based Pricing
Pricing is Simplified
Cost-Plus Pricing EthicalApproach is an That Adds a Standard Markup to the Cost of the Product.
Attitudes of Others
Tries to Determine the Price at Which a Firm Will Break Even or Make a Certain Target Profit.
Cost in Dollars (millions)
12 10 8 6 4 2 Total Revenue
Target Profit ($2 million)
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200
400
600
800
1,000
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Internal Factors
Marketing Objectives Marketing Mix Strategy Organizational considerations
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Marketing Objectives
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Set prices low to prevent competition from entering the market, might be reduced temporarily to create excitement or draw more customers.
Prices
Nonprofit
and public organization may have other pricing objectives such as:
University Hospital Theater
may aim for full cost recovery, may price to fill maximum number of
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When
Setting Prices
Before setting prices, the marketer must understand the relationship between price and demand for its products
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Pure Competition
Many Buyers and Sellers Who Have Monopolistic Little Effect on the Competition Price Many Buyers and Sellers Who Trade Over a Range of Prices
Single Seller
Oligopolistic Competition
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Normally, demand and price are inversely related Higher price = lower demand For prestige (luxury) goods, higher price can equal higher demand when consumers perceive higher prices as higher quality
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Inelastic demand occurs when demand hardly changes when there is a small change in price Elastic demand occurs when demand changes greatly for a small change in price 19 19
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10-
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When
Setting Prices
Comparison of offering in terms of customer value Strength of competitors Competition pricing strategies Customer price sensitivity
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