Price Strategy

Marketing Essentials
MKTG260
A Tale of Two Properties

$1395/Month $2295/Week
Objectives

• Elements of price
• Pricing objectives
• Pricing strategies and tactics
• Price adjustments
Elements of Price

Competitio
Demand
n

Costs Elasticity
Pric
e
Elements of Price
• Demand and Costs:

Too high – no sales

Demand

Costs
Too low – no profit
Elements of Price

• Price elasticity of demand:

◦ Customer sensitivity to price changes
◦ Demonstrated in demand curve

Demand
Curve

Price

Quantity Demanded

Price elasticity occurs when change in price results in change in demand.

Elements of Price

• Competition:

Monopoly Duopoly Monopolistic Pure

Competition Competition
One competitor Two competitors Multiple Multiple
differentiated undifferentiated
competitors competitors
Complete Price Price “Fixing” Multiple Prices relatively
Control differentiated similar
prices
Pricing Objectives

• Maximize price based on:

Profit • Perceived value
• Competition

Market • Increase market share

• Usually a lower price strategy
Share
Market • Focus on needs of customer
• What the market will bear
Demand
• Focus on moving inventory
Volume • De-emphasis on value or return
Pricing Strategies

• Considerations:
◦ Organizational objectives and brand reputation
◦ External environment
 Competition
 Economics
Prestige
 Regulatory
Skimming
Matching
Competitio
Value n
Pricing
Penetratio
n

Low to High Pricing Strategies

Pricing Tactics
Price adjustments

• Environmental and/or internal forces can

trigger the need for price change

Environment Internal
• Competition • Costs
• Regulation • Fixed
• Economics • Variable
• Social • Expertise &
• Technologic experience
al
Assignment 2 Analysis
Pricing Strategy: Describe the pricing strategy.
Choose one specific product for sale by the company
and state its price. Make assumptions of how the
company derived the selling price for the product in
terms of demand, costs, objective and strategy.
(10 marks)