FACTORS
TO CONSIDER WHEN SETTING PRICES
INTERNAL FACTORS
Survival
Current profit
maximization
Market share Leadership
Product Quality
Leadership
Prevent competition
To keep loyal customers
To create excitement
In conjunction with
(According to) marketing mix
Depending on costs at
different levels of production
Who within the
organization is responsible for setting prices
EXTERNAL FACTORS
In pure competition -
going rate pricing
In monopolistic
competition - depending on differentiation in quality, features, style, design
etc.
In oligopolistic
competition - depending on differentiation and market share
In pure monopoly -
depending on the strategy & policy of the government or the firm.
Consumers perceptions of
price & value
Depending on the demand
curve.
Depending on the price
elasticity of demand
Substitute products are
available or not.
Relative expenditure on
the product is low or high
Competitor's price
offers.
Economic conditions
Resellers reactions
Laws affecting the product.
PRICING APPROACHES
Cost plus pricing
Breakdown analysis and
target profit pricing
Perceived Value pricing
Going rate pricing
Sealed Bid pricing.
OTHER PRICING STRATEGIES
Pricing an innovative new product
· * Market skimming pricing
· * Market penetration pricing
Product Line pricing
Optional product pricing
(e.g., vehicle & accessories)
Captive product pricing
(e.g., razor & blade)
Two-part pricing (e.g.,
fixed fees plus variable usage rate)
By-product pricing
Product Bundle pricing
(e.g., season tickets for sports/rooms)
Discount pricing
Cash Discount
Quantity Discount
Functional Discount
Seasonal Discount
Allowance
Discriminatory Pricing
Customer Segment Pricing
Product Form Pricing
Location
Time pricing
Promotional Pricing
Loss leader / cash
rebates / low-interest financing
Longer warranties / free
maintenance / discounts
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