Marketing 11.5

Pricing The price of the product can have major influence on its appeal and weather or no customers think it is good value for the money.

Setting Pricing Policy 1. Selecting the pricing objective 2. Determining demand 3. Estimating costs 4. Analyzing competitors’ costs, prices, and offers 5. Selecting a pricing method 6. Selecting final price

Factors Influencing Price The type of the product The cost of producing a unit The ability of customers to pay The demand for the product The sensitivity of demand to price changes Competitors Pricing points The firms objectives Stage of the product life cycle

Pricing Strategies for New Products Penetration Pricing Price Skimming Competitive Pricing Price taking

Market-penetration pricing Setting a low price for a new product in order to attract a large number of buyers and a large market share. Something like Vivo, Oppo and Lenovo are using this strategy to try to take market share away from Samsung and Apple

Price Skimming Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price: the company makes fewer but more profitable sales.

Competitive Pricing Competitive Pricing' Setting the price of a product or service based on what the competition is charging. Competitive pricing is used more often by businesses selling similar products, since services can vary from business to business while the attributes of a product remain similar.

Price Taking Price takers are firms that accept the price which dominates the market. Example: a small independent electrical retailer may have to accept the price set my the major seller. Small independent stores are usually price takers because they do not have the power to negotiate better prices.

Homework Questions #6-#7 Page 130 Case Studies Fastjet Vertu Ti Crocs Smoothies Due Monday December 14th Chapters 9,10 and 11.1-11.5 will all BE ON THE FINAL