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The Marketing Mix: PRICE
Transcript of The Marketing Mix: PRICE
PRICE Charge a low enough price to attract cutsomers, but high enough to earn a profit. The Four P's of Marketing Product, Price, Promotion, Place Objectives What is the most important thing you want your pricing to do? Maximize Sales Increase Profit Attract Customers Discourage Competition Establish Image How can each of these be achieved? Return on Investment First consider: ROI After your initial investment, how much do you want to make in return? (Can change and is usually lower in the beginning.) EX: $5,000 investment with a 15% return
_______ x _______ = ________ Market Share A business's percent of total sales generated by all companies in the same market $ of Sales / $ Total Mkt Size = Mkt Share %
EX: Your sales = $192,500 of an entire market sized at $1,750,000 Advertising
Networking Ways to increase Mkt Share Pricing a Product Pricing a Service More than one price to charge...
amount of competition Demand -Based Pricing How much customers are willing to pay Survey potential customers Highest price identified is highest amount to charge Cost -Based Pricing Determined by using wholesale costs as a basis Markup Price Markdown Price Percent subtracted from retail price Example Percent added to cost of item How much are you willing to spend for a movie ticket? Examples? Competition -Based Pricing Consider what your competition is charging THEN charge the same, slightly less, or slightly more What do you shop around to find the best price for? Consider the cost of the item used PLUS amount of time involved in anything else included with service. Time -Based Pricing Price is based on the time it takes to copmlete
the service. Is separate money for materials included? Negotiations can be done Examples: Legal Construction Bundling Services are combined for 1 price rather than paying for all individual parts. Example: Pricing Techniques 1. Introduction Pricing: 2. Psychological Pricing 3. Discount Pricing Skimming Penetration New and Unique Product price to recover costs to develop the product price as competitors enter the market THEN intro price to build a strong customer base and take from the competition Price impacts customer perception Prestige Pricing Odd/Even Pricing Price Lining charging a lot to create a feeling of superiority sensitivity to certain ending numbers Odd = Bargain Even = Nothing Special Leveling for specific categories based on features and quality Reduce the Price (Markdowns) Cash Discount Quantity Discount Trade Discount Seasonal Discount Paying your invoice early
and getting a discount for it. Buy in bulk to reduce selling expenses Reduce list price from manufacturer Sales on out of season merchandise High enough to
earn a profit Low enough to