PRICING STRATEGY REVIEWER
PRICE – The amount of money expected, required, or given in payment for something.
- Element in Marketing Mix that produce revenue.
- It communicates that company’s intended value positioning of its product or brand.
- Pricing decisions are complex and must take it accounts many factors:
- COMPANY, CUSTOMERS, COMPETITION, AND MARKETING ENVIRONMENT
THE 4P’S – PRODUCT, PRICE, PLACE, AND PROMOTION
THE 4C’S – CONSUMER, COST, CONVENIENCE, AND COMMUNICATION
pricing decision must be consistent with the firms marketing strategy.
WHAT IS PRICING STRATEGY?
- A business can use a variety of pricing strategies.
When selling a product or service. The price can be set to maximize profitability for each unit sold or from the market
overall. It can be used to defend an existing market from new entrants, to increase market share within a market or to
enter a new market. Businesses may benefit from lowering or raising prices depending on the needs and behaviors of
customers and clients in the particular market. Finding the right pricing strategy is.
UNIT COST - represents the average expense incurred by a business to produce one unit of a product or provide one
unit of service
PROFIT MARGIN - measure of a company’s earnings (or profits) relative to its revenue.
- the acceptable profit margin for non-food is 20%.
- the acceptable profit margin for food is 20% up to 100%
- in setting a profit margin, a business should always check its competitors.
- Express in percentage.
MONEY - a medium of exchange that is centralized, generally accepted, recognized, and facilitates transactions of
goods and service. - money originated from China.
PRICING STRATEGY OBJECTIVES
1. LONG RUN PROFITS - profits are ordinary, 5t there are no economic profits. Refers to the time frame during
which the production factors are variable or changeable.
- standard price, sustain, stable.
- Konti lang yung tubo pero umiikot.
2. SHORT RUN PROFITS - a fixed factor of production exists. It expresses the idea that an economy behaves
differently depending on the length of time it has to react to certain stimuli.
- malaki yung tubo.
Ex: Depending on the season, limited edition, no. of consumption.
3. INCREASE SALES VOLUME - discounts, promo. low the price.
4. COMPANY GROWTH
5. MATCH COMPETITORS PRICE - uniqueness, customer vale, ads
6. CREATE INTEREST & EXCITEMENT
- ABOUT THE PRODUCT - discount. coupons, 12.12, promos
7. DISCOURAGE COMPETITORS FROM CUTTING PRICE - upgrade / invest on your business (add more flavors)
8. SOCIAL, ETHICAL, & IDEOLOGICAL OBJECTIVES - help the society
9. DISCOURAGE NEW ENTRANTS
10. SURVIVAL - increase or decrease price.
PRICING STRATEGY FOR CHALLENGING ECONOMIC TIMES
• Pricing is a market consideration, not a cost consideration.
• Understand your customer's primary goals. Be dear on what the customer wants first, then set pricing and bundling
decisions.
• Consider bundling products or services together. Always bundle a low and high valued product together. This will
create higher sales and greater profitability.
• Understand your value proposition. Have a clear understanding of it and how your product or service is
differentiated from the competition.
• know where you are on the scale of " Innovative -to-commoditized"
• Build the customer’s perception of value. constantly build on customer perception. The more subtle the
differentiation of the product or service, the more.
