Marketing management

GROUP2

PRICING STRATEGIES AND

PROGRAMMES
First one Abshir salad Ismail
 Introduction

 In the entire marketing mix, price is the one element that

produces revenue; the others produce costs. Price is also one
of the most flexible elements: It can be changed quickly,
unlike product features and channel commitments. Although
price competition is a major problem facing companies, many
do not handle pricing well.
 PRICING OBJECTIVES

 Why do marketing managers set different prices for

different products?.)
 Pricing objectives are overall goals that describe what the
firm wants to achieve through its pricing efforts.
A fundamental pricing objective is survival. Most
organizations will tolerate difficulties such as short run
losses and internal upheaval if they are necessary for
survival
Profit.

Return on investment.
Click to add text

Cash flow.
Second one Mr.peter
Specific objectives
Avoid market
penetration.

Avoiding
Stabilize the
government
market.
intervention
 FACTORS AFFECTING PRICING DECISIONS

 When a company or business manufactures a product, then it incurs

many fixed and variable costs to produce the product. The
management of the company has to consider all of these costs
while setting the price of a product; the whole process is called
price decision.
 Both of these types of pricing decisions have their advantages and
disadvantages. But it all depends on the company’s marketing
strategy. However, some other internal and external factors affect
the pricing strategy of the company. We’ll discuss these factors one
by one, they are as follow;
 Company’s Marketing Mix Different
Management Strategy Characteristics

The Overall
Costs Objective of the
Company
 External Factors Affecting
Pricing Decision

 Some of the external factors that affect pricing

decision of the company/business
Demand in the are as
follows;
Market

Competitors
Fourth one Mrs. Amal
Company’s Suppliers

The Economy of the Country

Customers

Local Government
 PRICING APPROACHES/
METHODS
 The price the company charges will be somewhere
between one that is too low to produce a profit and one
that is too high to produce any demand. Pricing methods
or approaches include cost-based approach (cost-plus
pricing, break-even analysis, and target profit pricing); the
buyer-based approach (value-based pricing); and the
competition-based approach (going-rate and sealed-bid
pricing)
Cost-Plus pricing Break a-even
Analysis and Value-Based
Target profit Pricing
pricing
THE PROCESS OF SETTING THE PRICE

 A firm must set a price for the first time when it develops a
new product, introduces its regular product into a new
distribution channel or geographical area, and enters bids on
new contract work. In setting a product’s price, marketers
follow a six-step procedure: (1) selecting the pricing
objective; (2) determining demand; (3) estimating costs;
(4) analysing competitors’ costs, prices, and offers; (5)
selecting a pricing method; and (6) selecting the final price.
Third one Mr. libaan
 STEP 1: SELECTING THE PRICING
OBJECTIVE

A company can pursue any of five major objectives through

pricing:
 Survival.
 Maximum current profit.
 Maximum market share.
 Maximum market skimming
 Product-quality leadership
• STEP 2: DETERMINING DEMAND

 Each price will lead to a different level of demand and,

therefore, will have a different impact on a company’s
marketing objectives. The relationship between
alternative prices and the resulting current demand is
captured in a demand curve
 Price Sensitivity
 Price Elasticity of Demand
 STEP 3: ESTIMATING COSTS

 While demand sets a ceiling on the price the company can charge for its
product, costs set the floor. Every company should charge a price that covers
its cost of producing, distributing, and selling the product and provides a fair
return for its effort and risk. Fixed costs are costs that do not vary with
production or sales revenue, such as payments for rent, heat, interest, salaries,
and other bills that must be paid regardless of output. In contrast, variable
costs vary directly with the level of production.
STEP 4: ANALYZING COMPETITORS’
COSTS, PRICES, AND OFFERS
 Within the range of possible prices determined by market demand
and company costs, the firm must take into account its competitors’
costs, prices, and possible price reactions. If the firm’s offer is
similar to a major competitor’s offer, then the firm will have to
price close to the competitor or lose sales. If the firm’s offer is
inferior, it will not be able to charge more than the competitor
charges. If the firm’s offer is superior, it can charge more than does
the competitor—remembering, however, that competitors might
change their prices in response at any time.
Five Mr.Mohamoud
STEP 5: SELECTING A PRICING
METHOD
 The three Cs—the customers’ demand schedule, the cost function,
and competitors’ prices—are major considerations in setting price.
First, costs set a floor to the price. Second, competitors’ prices and
the price of substitutes provide an orienting point. Third,
customers’ assessment of unique product features establishes the
ceiling price. Companies must therefore select a pricing method
that includes one or more of these considerations. These could
include: markup pricing, target-return pricing, perceived-value
pricing, value pricing, going-rate pricing, and sealed-bid pricing.
 ADAPTING THE PRICE

 Geographical Pricing
 2. Price Discounts, Allowances, and Promotional Pricing.
 Promotional Pricing.
 Discriminatory Pricing.
 Product-Mix Pricing .
INITIATING AND RESPONDING TO
PRICE CHANGES

Initiating to . Initiating Initiating price

Price Change price cut increase
Lastly Mr.Nur
 Responding to Price Change

Maintaining Price
Increasing price and quality
. Reducing price
 Conclusion
 Price is the element that produces revenue; the others produce
costs. Price is one of the most flexible elements in marketing
because it can be changed quickly. Most firms set their prices to
maximize profits from a given situation, and may set low or
high prices depending on the situation. Pricing decisions can be
complex because of the number of Price is the element that
produces revenue; the others produce costs. Price is one of the
most flexible elements in marketing because it can be changed
quickly. Most firms set their prices to maximize profits from a
given situation, and may set low or high prices depending on
the situation. Pricing decisions can be complex because of the