1. PRICING DECISIONS Marketing Management Session 9 November 7, 1997

2. SESSION OUTLINE The price: what it means to buyers and seller Price in the marketing mix Pricing decisions: –choosing the pricing method –choosing the pricing strategy –setting the price Video: Leader of the pack Case presentations: Fottle, part II

3. PRICE Most visible aspect of the marketing mix Generates revenues and therefore profits Generally controled by the seller Highly regulated Communication tool for –buyers –competitors –shareholders

4. PRICE IN THE MIX Consistent with positioning Sufficiently high to cover costs Sufficiently low to generate demand Competitive Many interactions with other areas (finance, accounting, production, …)

5. PRICING METHODS Cost-based Demand based Competitive pricing –Advantages? –Disadvantages?

6. PRICING STRATEGY Skimming pricing: –high introduction price –quick recovery of investment Penetration pricing: –low introduction price –achieve large market share

7. SETTING PRICE Price itself Price to resellers Flexible pricing policies –quantity discounts –co-op allowances –price discrimination over time

8. NEXT WEEK Communication mix Read chapter 14 Definition of promotional tools The communication process Push and pull strategies