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Price
Price
The amount of money charged for a product or service or the sum of the values that consumers
exchange for the benefits of having or using the product or service
All for-profit organizations and many nonprofit organizations set prices on their goods or
services. Whether the price is called rent (for an apartment), tuition (for education), fare (for
travel), or interest (for borrowed money), the concept is the same. Throughout most of history,
prices were set by negotiation between buyers and sellers.
The image of your product-price must compliment/match the image of the product.
Eg. High image car has a higher price. BMW
Competitors prices-if competitors offer similar products and in highly competitive
markets prices must be similar to competition
Stage of PLC-introductory stage higher prices can be charged, skimming in maturity
prices are lower.
Cost of production prices must finally cover cost to earn profit.
Demand and elasticity of demand
Affordability and willingness to pay
Eg. Anchor in Sri Lanka even though not affordable the customer is willing to pay
Strategies of the company-target segments, positionmi9ng of your brand, level of
differentiation of your product.
Differentiated Pricing
Here the same product is offered to the same customer at different prices depending on the time
of the day, month or year at which the product is purchased.
E.g. Telecom customers are charged a peak rate for calls during office hours and a different
cheaper rate for calls taken at night. Media owners (specially electronic media T.V, Radio)
charge different advertising rates for different times of the day.
Market
Differentiated Pricing
Here the same product is offered to different customers at the same time at different prices.
Eg Public utility services like transportation, charge different prices for adults and children.
Tourist attractions are sold at higher prices to foreigners and lower prices to locals.
Product
Differentiated Pricing
Here essentially the same products is offered with slight variations at vastly different prices to
the same customers at the same time.
E.g. Different classes of seats on an aircraft or in a cinema.
7 - Value Pricing
The Marketer creates a high perceived value of the product by consistent product performance,
high quality and effective promotions. The price is fixed below the perceived value such that the
Most governments and public bodies use a tender system for their purchases. Each supplier must
submit his price which is kept secret until the opening of the tenders.
Since the best offer will be selected, each supplier will try and fix his price on what he thinks his
competitor will offer.
3 - The Open Bid Pricing
Auctioneers and stock dealers (stock market) use this method.
4 - Negotiated Contract Pricing
When selling high value items it is usually the case that customers will try to bargain or negotiate
the terms of sale. This often results in a final price different to the original price. This
bargaining arises because competitors have also offered this product to the customers.
For other marketing notes visit
http://ragulan.wordpress.com/2009/07/01/marketing-notes/