Pricing Strategy

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TABLE OF CONTENTS

TOPICS PAGE

INTRODUCTION ………………………………………………………………..3

PRICING INTRODUCTION …………………………………………………… 3-4

IMPORTANCE OF PRICING …………………………………………………….4-5

SOME OF THE MORE COMMON OBJECTIVES OF PRICING………………..5-6

FACTORES EFFECTING DEMAND……………………………………………. 6-7

SETTING PRICING POLICY …………………………………………………… 7-11

PRICING INFLUENCES ON PRICING POLICY……………………………….. 12

PRODUCT PRICING STRATEGY ……………………………………………… 13-17

NEW PRODUCT PRICING STRATEGIES …………………………………….. 13-17

PRODUCT MIX PRICING STRATEGIES ……………………………………… 13-17

PRICE ADJUSTMENT STRATEGIES …………………………………………. 13-17

SETTING THE PRICE …………………………………………………………. 18

FACTORES AFFECTING PRICING DECISION ………………………………..19-20

INITIATING AND RESPONDING TO PRICE CHANGES …………………….21

PRICING STRATEGIES OF PEPSI AND COKE……………………………….22

INTRODUCTION

Narrowly, price is the amount of money charged for a product or service.

Broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service.

Dynamic Pricing: charging different prices depending on individual customers and situations.

Price is the one element of the marketing mix that produce revenue ; the other element produce cost, prices are the easiest marketing mix element to adjust ; product features, channels and even promotion take more time .price also communicating to the market the company’s intended value positioning of its product or brand.

Today companies are wrestling with a number of difficult pricing tasks • How to respect to aggressive price cutters
• How to price the same product when it goes through different channels • How to price the same product in different countries • How to price on improved product while still selling the previous version

Many companies do not handle pricing well. They make these common mistakes; price is to cost-oriented ; price is not revised often enough to capitalize on market changes; price is set independent of the rest of the marketing mix rather than as an intrinsic element of marketing positioning strategy; and price is not varied enough for different product item ,market segmentation , distribution channels, and purchase occasions.

Companies do their pricing in a variety of ways. In small companies, price is often set by the boss. In larger companies, pricing is handling by division and product line managers. Even here, top management sets general objectives and policies and often approve the prices proposed by lower level of management.

PRICING-INTRODUCTION
Setting the right price is an important part of effective marketing. It is the only part of the marketing mix that generates revenue (product, promotion and place are all about marketing costs). Price is also the marketing variable that can be changed most quickly, perhaps in response to a competitor price change. Put simply, price is the amount of money or goods for which a thing is bought or sold. The price of a product may be seen as a financial expression of the value of that product. For a consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a product, as compared with other available items. The concept of value can therefore be expressed as:

(Perceived) VALUE = (perceived) BENEFITS – (perceived) COSTS A customer’s motivation to purchase a product comes firstly from a need and a want: e.g. • Need: "I need to eat
• Want: I would like to go out for a meal tonight")
The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. "I really fancy a McDonalds"). The perception of the value of a product varies from customer to customer, because perceptions of benefits and costs vary. Perceived benefits are often...
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