Pricing Strategy

Questions Compare between Intensive Distribution and Exclusive Distribution Strategies, giving examples. Explain the feedback provided by the distribution channel to the company

Introduction Pricing decisions characterized by a high degree of complexity because of the many variables contained and its reflection on the overall activities of the organization, thus significantly affected the marketing strategy pricing strategy Price is one of the more elements Subject to negotiation between the seller and the buyer and the difference in their grades and their purchasing power. Also highlights the impact of the alternative price for the same item on the final purchase decision for the consumer, and thus its transformation into a deal with competitors instead of keeping it within the circle of loyalty to the company or the product provided to the market.

Introduction Chapter contents: Multiple meanings of price and its definition. The price strategic role in marketing mix. Pricing strategy adopted by business organizations. The main factors of influence on pricing decisions. successive steps in the Pricing process.

The Definition of Pricing “The expression of the value of things being exchanged in the market.“ The price is just an expression of the give-and-take relationship between individuals who pay the money on one side, and the marketing units on the other side . "The price in exchange for something." (Money)

The concept and definition of price The price is the most important element of the marketing mix in the organization: The price is a source of revenue and profits, while the rest of the marketing mix elements are considered costs. The price is more flexible to change depending on any emergency in the environment around the organization, while the rest of the elements would need long time and complicated actions to be changed.

Exchange Process Expenses Price For goods / services Fees Versus the benefit of education Interests Versus the benefit of loans Rent Versus the benefit of housing Versus the benefit of a lawyer Salary Employee Wage Worker Commission Broker or broker service Taxes As the price of the services provided by the government to citizens

The Strategic Role of Price Even in 1950 the price was the most important factor in the behavior of the buyer. Other factors: advertising, and packaging, the brand name Price is an important factor to cover the costs of activities (marketing and non-marketing). Profit = total return - the total costs   = (Price * quantity sold) - the total costs Price could affect the profits realized in many ways.

The Strategic Role of Price (cont.) Price represents a strategic dimension in each of the following: When formulating pricing decisions, they should cover all the objectives and strategies of the organization. Taking into consideration the importance of non-price competitive elements.

The Strategic Role of Price (cont.) Price decisions taken- must take into account cases of certainty and uncertainty. strategic pricing decisions are formulated through the interaction and consultation among all departments.

Pricing process steps 4. To identify ways of Pricing 3. Pricing policies 2. Identification of factors affecting pricing 1. Identify the Pricing goals (Survival, maximize profits, maximize current revenues, maximize sales growth, cost leadership) 6. Monitoring and correction of the market price 5. Determine consumer reaction to the market price 4. To identify ways of Pricing

I- The objectives of pricing: 1. Pricing for survival Where the company's goal at this stage is to survive in the market because of their capability with severe competition or difficult circumstances. In this stage, the company can accept the economic loss, but on condition, that the price of all variable costs and part of the fixed costs covers the loss. Then, the company is able to stay in the market.

2. pricing in order to increase current profits One of the important goals for companies is to maximize current profits and cash flows. 3. Pricing in order to increase market share The company wants to achieve leadership in market share by lower prices, and this will increase the company's sales rate compared to the competitors' sales of the same item.

4. Pricing in order to lead in quality Some companies want to be the leader of the market so as to provide the highest quality products and it can determine the price at which to achieve that. 5.The goal of the current status / non-competitive pricing In this case the company is in an ideal situation in terms of price and sales and not searching for what is more, and thus the goal of pricing in this case is to stay as it is.

II- Identify the factors affecting the pricing decisions: These factors are divided into two groups External or environmental factors Internal factors

1. External or environmental factors They include: The Customer’s Effect on the price Consumer awareness of the price (does he know the price, what are the expectations for the price, how the link between price and quality) Consumer response to alternative levels for the price (for the price of consumer demand, price elasticity of demand).

environmental factors Increase wholesale / retail trade. Focus on inter dealers and retail are willing to accept the planned price . Follow the franchise in the retail policy to ensure similarity in pricing policies. Awarding wholesalers and retailers who are committed to the planned list of prices

Legal effects. Price limits imposed by the state on certain goods. Government inter-vention by issuing special laws importation of certain goods and customs duties.   Competition. Full competition (a large number of buyers and a large number of sellers and therefore near-uniform price). Monopolistic competition (a large number of buyers and a large number of sellers, but excellence is in service, the place, the physical environment .....).

Competition oligopoly (few sellers, and therefore can determine the price at which the product fit in such as iron and steel industry, communications ....) Monopolistic competition full (one seller is the one who determines the price, such as the electricity company, mail, water ....)

Economic conditions. Stages of the economic cycle (recession, recovery, recession, boom). Inflation (prices are high and a focus on quality). Depression (consumer prices fall because it becomes sensitive for prices)