Pricing (price policy) How do consumers process and evaluate prices? How should a company set prices initially for products and services? How should a company adapt prices to meet varying opportunities: When should company initiate a price change?

Price is... Price is the one element of the marketing mix that produces revenue – the other elements produce costs. Prices are perhaps the easiest element of the marketing program to adjust. Throughout most of history, prices were set by negotiation between buyers and sellers. Bargaining is still a sport in some areas.

How companies price? Factors of pricing: Internal factors External factors

Perception of price Reference prices: comparing an observed price to an internal reference price which customers remember or to an external frame of reference such as a posted „regular retail price.“ Price-quality inferences: many consumers use price as an indicator of quality Price endings: Prices that end with 0 and 5 are common in market place. Also ending with „9“ is very popular.

The three major considerations in price setting: costs set a flooor to the price. Competitor´s prices and the price of substitutes provide an orienting point. Consumers ´ assessment of unique features establishes the price ceiling.

Selecting the final price Impact of other marketing activities Company pricing policies Gain-and-risk sharing pricing Impact of price on other parties

Adapting the price Geographical pricing Price discounts and allowances Promotional pricing Differentiated pricing