Published on: Mar 4, 2016
Transcripts - Price setting
PRICE SETTING Prepared by:
PRICE SETTING• Price setting is a very critical area in marketing mix decisions of a company. It is the only element that generates revenues for the company, and all others involve only costs.• Price represents the value that is exchanged in a marketing transaction.
Price Competition:price-based competition occurs when consumers cannot readilydifferentiate between competitive offerings. In this situationcompanies use price as a tool to differentiate its products fromcompetitors’ products to beat or match prices set by competitors.Non-Price Competition:Non-price competition focuses on other than price factors of aproduct such as distinctive productfeatures, quality, service, packaging, and promotion to make itmeaningfully differentiated from competing brands.
Pricing ObjectivesPricing objectives focus on what a company wants toachieve through establishing prices. Profit Return on Investment (ROI) Market Share Product Quality
Objectives Typical Actions Survival Price adjustment to enable company to increase sales volume to meet company expenses. Profit Determine price and cost levels that permit company to realise maximum profits.PricingObjectives Return on Determine price levels that allow company to yield Investment targeted Return on Investment.and TypicalCompany Market Adjust prices to maintain or increase sales volume Share relative to competitors.Actions Product Company sets prices to recover R&D expenditures Quality and high product quality. Establish high-quality image.
Price Setting ProcedureThe steps involved in price setting include:(1) Development of Pricing Objectives(2) Determination of Demand(3) Estimation of Costs(4) Examining Competitors’ Costs, Prices, and Offers(5) Selecting a Pricing Strategy