Starter - Product pricing Who do you think sets the prices for these good? Which are high prices and which are low?

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Presentation transcript:

Starter - Product pricing Who do you think sets the prices for these good? Which are high prices and which are low?

Competitive pricing Many businesses can determine a price for their products; they are price makers.

Free Market pricing But some companies have no control over the prices they can sell their good for if one product is the same as the next. Prices are determined by the forces of supply and demand. They are price takers. Commodity products

Pricing in a competitive environment Price= ‘The price at which the product is sold. The prices in the long term should cover costs’ Think about the product and prices of the above airline

Pricing Strategies Cost Plus = Cost to manufacture plus a mark up for profit. (most pricing would start here!) Price Skimming = High price is set for new product on the market. Penetration = Price set lower than competition to enter the market.

Pricing Strategies Competitive = In line or just below competitors pricing to gain sales. Promotional = Very low prices for a short period of time.

Advantages / Disadvantages of pricing strategies Pricing StrategyAdvantagesDisadvantages Cost Plus Pricing Skimming Pricing Penetration Pricing Competitive Pricing Promotional Pricing

Cover costs & make a certain profit High profit to recoup development costs Pricing Strategies PRICING STRATEGIES USED BY TESCO COST PLUS PRICING PRICE SKIMMING PRICING To enter new markets PENETRATION PRICING Maintain market share To increase sales COMPETITIVE PRICING PROMOTIONAL PRICING