1. Pricing as Part of The Marketing Mix Chapters 25 and 26 Glenco: Marketing Essentials

2. What Affects Pricing?  Costs and Expenses Fixed Expenses Fixed Expenses Variable Expenses Variable Expenses  Supply and Demand Elastic Demand Elastic Demand Inelastic Demand Inelastic Demand

3. Factors Affecting Pricing con’t  Competition Monopoly Monopoly  Consumer Perception Example: Generic vs. Branded Products Example: Generic vs. Branded Products

4. Base Pricing Concepts  What is base pricing?  Types of pricing concepts Cost oriented pricing Cost oriented pricing Markup-retail pricingMarkup-retail pricing Cost Plus Pricing-manufacturingCost Plus Pricing-manufacturing Demand oriented pricing Demand oriented pricing Competition Oriented Pricing Competition Oriented Pricing

5. One Price vs. Flexible  One Price Pricing All customers charged the same price All customers charged the same price  Flexible Pricing Different customers pay different prices for same item Different customers pay different prices for same item

6. Ways to Adjust Base Pricing  Product Mix Strategies Price lining-groups of merchandise ($25.00, $35.00 etc ) Price lining-groups of merchandise ($25.00, $35.00 etc ) Optional Product-special order Optional Product-special order Captive Products- ex: printers and cartridges Captive Products- ex: printers and cartridges By Products-mulch By Products-mulch Bundle pricing-ex: computers Bundle pricing-ex: computers Geographical-location of customer Geographical-location of customer International International Exchange rates, tariffs, shipping rates, economic conditionsExchange rates, tariffs, shipping rates, economic conditions

7. Base Pricing Adjustments  Segmented Pricing Strategies Buyer identification-different segments pay different prices Buyer identification-different segments pay different prices Senior citizens, First Class travelers, StudentsSenior citizens, First Class travelers, Students Product Design-Different product styles w/ different prices (demand related) Product Design-Different product styles w/ different prices (demand related) North Face JacketsNorth Face Jackets Purchase Location-Where products are sold Purchase Location-Where products are sold New York Theater tickets vs. Road ShowsNew York Theater tickets vs. Road Shows Time of Purchase-Peak times=more $ Time of Purchase-Peak times=more $

8. Psychological Pricing Strategies  Odd Even Pricing housing market 299.0 vs. $300.0 housing market 299.0 vs. $300.0  Prestige Pricing Higher markup ex: Rolex watches, Mercedes Higher markup ex: Rolex watches, Mercedes  Multiple Unit Pricing 3/$5.00 3/$5.00  Everyday Low Price-Walmart

9. Promotional Pricing  Loss Leader- set below cost  Special Event-reduced for short period  Rebates and Coupons

10. Discounts and Allowances  Cash Discounts- 2/10 net 30  Quantity Discounts  Trade Discounts- 40% off line price (closeouts)  Seasonal Discounts-Dumping items at the end of season Christmas, Halloween, swimwear Christmas, Halloween, swimwear  Allowances Trade in’s on cars, major appliances, computer parts Trade in’s on cars, major appliances, computer parts

11. Questions to Ask When Determining Prices  What are your pricing objectives? Competition, market share, profitability Competition, market share, profitability  What are the costs involved in manufacturing?  What is the demand for your product?  What does your competition charge?  What should be your pricing strategy? Segmented, seasonal or location of market Segmented, seasonal or location of market  What should be your price based on your answers to the above questions?