Marketing: Price L.O: I can explain different pricing methods that may be adopted by different businesses. Keywords: Price: the amount paid by the customer.

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Presentation transcript:

Marketing: Price L.O: I can explain different pricing methods that may be adopted by different businesses. Keywords: Price: the amount paid by the customer to the supplier when buying a good or service. Product quality: The product meets the needs and expectations of the customers. 7 pricing strategies: 1.penetration, 2. cost-plus, 3. competitive, 4. promotional, 5. market-skimming 6.dynamic, 7. Psychological

There are 7 pricing strategies… (1)Market-skimming (2)Penetration pricing (3)Competitive pricing (4)Cost-plus pricing (5)Promotional pricing (6)Dynamic pricing (7)Psychological pricing

1. Market Skimming A high price is set to maximise short-run profits. Once rivals enter with a similar product then prices will start to fall.

2. Penetration pricing The price is set lower than other products to encourage brand loyalty and to gain a high volume of sales.

3. Competitive Pricing The price is set at a level similar to that set by competitors.

4. Cost-plus pricing Price is set by adding the required/desired profit on to the cost of making the product.

5. Promotional pricing The normal price is discounted sometimes below cost known as loss-leader pricing. Or customers are offered more of the product for less than the full price. Buy One Get One Free.

6. Dynamic pricing Pricing items at a level determined by a particular customer's perceived ability to pay.

7. Psychological pricing Pricing based on the theory that certain prices have a psychological impact. Retail prices are often expressed as "odd prices": a little less than a round number, e.g. $19.99 or £2.98.

Choosing the right pricing method Is it a new product? Is the product unique? Is there a lot of rivals? What are the costs of making the product?