1. How much will I charge for MILK?
Pricing
Eagle Challenge
Introduction
Word of the Day
Due today
How much will I charge for MILK?
Weebly
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

2. possession utility information utility form utility place utility
Which economic utility increased when fast-food restaurants began accepting credit cards?
possession utility
information utility
form utility
place utility
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

3. The Steps of Price Planning
Learning Objectives:
The different forms of price
The importance of price
The goals of pricing
The difference between market share and market position
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

4. The Steps of Price Planning
Why It's Important
Price is one of the four Ps of the marketing mix and is an essential element in marketing a product to the correct target market.
**The goals of company and government regulations are two issues that must be considered in the pricing process** Understanding the steps involved in determining the price of a product is essential for business success.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

5. FRIDAY price share market position return on investment
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

6. What Is Price?
Price is the value of money (or its equivalent) placed on a good or service. It is usually expressed in monetary terms.
The oldest form of pricing is the barter system—the exchange of a product or service for another product or service, without the use of money.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

7. image—to some customers, high price equals quality
Importance of Price
Price is involved in every marketing exchange. It helps establish and maintain a firm's:
image—to some customers, high price equals quality
competitive edge—a business can attract customers by guaranteeing low prices
profits—sales price is directly related to the price and number of items sold
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

8. Price per Item x Quantity Sold = Sales Revenue
The Steps of Price Planning
Projected Effects of Different Prices on Sales
Price per Item x Quantity Sold = Sales Revenue
An increase in the price of an item may not produce an increase in sales revenue. Why is this true? Are you more likely to buy a higher priced item or a lower priced item?
$ $10,000
$ $11,250
$ $11,200
$ $11,375
$ $12,000
$ $12,500

9. The Steps of Price Planning
Goals of Pricing
Marketers’ pricing goals include:
gaining market share
achieving a certain return on investment
meeting the competition
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

10. The Steps of Price Planning
Gaining Market Share
A business may engage in price competition to take market share from its competitors, forgoing immediate profits for long-term gains in market share.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

11. The Steps of Price Planning
Market Share
Market share is a firm's percentage of the total sales volume generated by all competitors in a given market. Which brand has the largest share of the digital camera market? If total sales for this market are $3 billion, what is the sales revenue for the market leader? Do you have more confidence in a company that has a large market share?
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

12. The Steps of Price Planning
Market Position
Market position is the relative standing a competitor has in a given market in comparison to its competitors. Which brand is the market leader in the U.S. cookie market? Given total sales of $1,221 (in millions) for the U.S. cookie market, what is the leader's market share? Are you more inclined to buy a product if you know it is the market leader? Why?

13. The Steps of Price Planning
Return on Investment
Return on investment is a calculation used to determine the relative profitability of a product. The formula for calculating return on investment is
Profit
Investment
Companies often price products to produce a certain return on investment.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

14. The Steps of Price Planning
Meeting the Competition
Some companies simply aim to meet the prices of their competition, either by following the industry leader or meeting the industry average.
Example: Automobiles and soft drinks have similar prices and compete based on other factors.

15. Worksheet
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

16. Pricing Concepts
The three basic pricing concepts involving cost, demand, and competition
The concepts of pricing forward vs. pricing backward
The idea of one-price policy vs. a flexible-price policy
The two polar pricing policies for introducing a new product

17. Pricing Concepts
Why It's Important
After deciding on pricing goals, marketers must establish pricing strategies that are compatible with the rest of the marketing mix.
Another term for Marketing Mix?
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

18. Vocab for Today markup cost-plus pricing one-price policy
flexible-price policy
skimming pricing
penetration pricing
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

19. Basic Pricing Concepts
There are three basic pricing concepts that you will want to consider in determining the price for any given product:
cost-oriented pricing
demand-oriented pricing
competition-oriented pricing
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

20. Pricing Concepts Cost-Oriented Pricing
In cost-oriented pricing, marketers first calculate the costs of acquiring or making a product and their expenses of doing business; then they add their projected profit margin to these figures to arrive at a price. Two common methods are:
markup pricing
cost-plus pricing
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

21. Pricing Concepts Cost-Oriented Pricing
Markup pricing is used primarily by wholesalers and retailers who are involved in acquiring goods for resale. The markup must cover the business’s expenses.
Price = cost + markup (as percentage)
Cost-plus pricing is used by manufacturers and service companies.
Price = all costs + all expenses (fixed and variable) + desired profit
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

22. What is the markup? What is the Cost?
Pricing
Worksheet
What is the markup? What is the Cost?
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

23. Pricing Concepts Demand-Oriented Pricing
Marketers who use demand-oriented pricing attempt to determine what consumers are willing to pay for given goods and services. Demand-oriented pricing is effective when:
there are few substitutes for an item
there is demand inelasticity
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

24. Pricing Concepts Competition-Oriented Pricing
Marketers who study their competitors to determine the prices of their products are using competition-oriented pricing. These marketers may elect to take one of three actions:
price above the competition
price below the competition
price in line with the competition (going-rate pricing)
Tender Pricing
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

25. Pricing Concepts Pricing Policies
A basic pricing decision every business must make is to choose between a one-price policy and a flexible-price policy.
A one-price policy is one in which all customers are charged the same price for the goods and services offered for sale.
A flexible-price policy permits customers to bargain for merchandise.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

26. Pricing Concepts New Product Introduction
A business may elect to price a new product above, in-line, or below its competitors. When a going-rate strategy is not used, two polar methods may be used:
skimming pricing
penetration pricing
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

27. Pricing Concepts New Product Introduction
Skimming pricing is a pricing policy that sets a very high price for a new product to capitalize on the initial high demand for a new product.
Advantages: High profit margin; may cover research and development costs.
Disadvantages: Cost must eventually be lowered; attracts competition; if price is too high no one buys.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing

28. New Product Introduction
Penetration pricing sets the initial price for a product very low to encourage as many people as possible to buy the product.
Advantages: Quick market penetration; can capture a large market; blocks competition.
Disadvantages: Low demand leads to big losses.
KOSSA Standard OE6: Compare various pricing strategies and explain the goals of pricing