CHAPTER 2

MARKETING MIX: PRICE

 MARKETING MIX

Four marketing decisions needed for the

effective marketing of a product. They
are called 4PS (product, price, place
promotion)

“THE RIGHT PRODUCT AT THE RIGHT PRICE

WITH THE RIGHT PROMOTION IN A
RIGHT PLACE”
 PRICE

 Amount paid by the customer to the

producer when buying goods.
 Very important part of marketing mix-
influence customer demand.
 Some consumers like to buy lower priced
products.
 Other consumers like to pay high price
(being able to afford such products gives
the consumer a certain status).
ROLE OF THE PRICE
 Deciding the price is important
 Rivals
 Too high  customer choose
rival’s product
 ROLE OF THE PRICE
 Deciding the price is important
 Rivals
 Too low  wonder about
products quality

Only
1500 SAR
ROLE OF THE PRICE
 Deciding the price is important
 Rivals
 Similar  Competition
PRICING STRATEGIES
1- COST-PLUS
PRICING STRATEGY
Cost plus pricing:

The price is set by adding a fixed amount (a percentage)  Advantage

to the cost of making or buying the product.
Ex: cost of producing a battery 8$. They want to make a  Easy to apply
profit of 150% per unit
Selling price: cost +150%
8 + (150%*8)=$20
 Disadvantage

 If price is to high
than the rival
price, you may
lose sales
2- PENETRATION PRICING
STRATEGY

Used to enter a new market Advantage

Price lower than the Ensures sales are

competitors made
Penetration pricing: setting
low price to attract customers-
Disadvantage
to build customer loyalty
Low price means
low profit
3- PRICE SKIMMING STRATEGY

Market skimming: setting high  Advantage

 helps establish
price for unique products (i.e.
good product
Google glasses). profits are high . quality

 Disadvantage

 May put off some

potential
customers because
of the high price
 4- COMPETITIVE PRICING
STRATEGY
Price in line with or just  Advantage
below rival.  Sales likely at high
Aim to capture more of realistic level
the market.  not under or
overpriced
similar price to
 Disadvantage
competitors, similar
products with no brand  Research
image advantage and competitors
highly competitive market. constantly to set
price
Used for new and existing
 costs time & money
products.
 5- PROMOTIONAL PRICING
STRATEGY
 Sold at very low price for short periods
 Promotional
 Advantages
pricing (different methods)
 Useful for getting rid
1. Loss leader pricing: used by supermarkets. It is of the over stocks
offering few products below the normal price or at  Helps make interest
loss. This will attract customers to the store and in the business
they buy other products.

2. Buy one get one free- create product  Disadvantage

awareness and build loyalty.
 The sales revenue
3. Discounting normal price- used to create will be lower
because the price
product awareness and when business wants to
sell off surplus stock.
6- PSYCHOLOGICAL PRICING
STRATEGY
Attention on the effect
of the price on the  Could include

consumers perception of  High price – High Quality

the product.  Status Symbol

 Pricing just below whole
number (e.g. 19,999
SAR)

 Cheaper Impression
7- DYNAMIC PRICING
Charging different consumer groups different prices
for the same product because they have different
demand levels.

Airlines use dynamic pricing (Saudi Airlines).

AlAhli and Etihad football match tickets (ticket prices

change to reflect increased demand for seats at
popular games and when the game is less popular
prices are reduced to encourage sales and fill the
stadium.
THANK YOU