1. Objectives: Recognize the role value plays in pricing decisions Explain the goal of pricing See the value of Pricing as one of the key components of the Marketing Mix

2. Price – the value in money (or its equivalent) placed on a good or service Value = Anticipated Satisfaction High anticipated satisfaction Low anticipated satisfaction Lower Price Higher Price

3. Return on Investment (ROI) – a calculation used to determine the relative profitability of a product Rate of Return (also referred to as “profit margin”) = Profit ÷ Investment Investment = $750 Sales = $1,000 Profit = $250 $250 (profit) ÷ $750 (investment) = ROI of 33% Question: Does higher price equal higher revenue?

4. Price per item x Quantity Sold =Sales Revenue $50200$10,000 $45250$11,250 $40280$11,200 $35325$11,375 $30400$12,000 $25500$12,500 What gain comes from this kind of pricing strategy? Market Share – a firm’s percentage of total sales volume generated by all competitors in a given market. Value? = long term Benefits via gaining more customers

5. Individual Assignment Answer the following questions on a separate piece of paper. This will be turned in for 4 points. Be prepared to share when called on. 1)Name a company where pricing is related to its image and promotion of that image. Explain how they do this. 2)Provide two examples of how businesses compete when not competing on price. 3)It costs $6.50 to manufacture, package and market a pair of flip- flops. They sell for $10.00. What is the rate of return on investment? 4)Why may the price of a concert ticket vary depending on where the concert is held within the United States?