Developing Pricing Strategies and Programs

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[pic] Price is the one element of the marketing mix that produces revenue; the other elements produce costs. Prices are perhaps the easiest element of the marketing program to adjust. Price also communicates to the market the company’s intended value positioning of its product or brand. A well-designed and marketed product can command a price premium. [pic] Pricing decisions are clearly complex and difficult. Holistic marketers must take into account many factors in making pricing decision—the company, customers, competition, and marketing environment. Pricing decisions must be consistent with the firm’s marketing strategy and its target markets and brand positionings. . UNDERSTANDING PRICING [pic] Price is not just a number on a…show more content…
A) The firm must decide where to position its product on quality and price. B) Most marketers have 3–5 price points or tiers. C) Consumers often rank brands according to price tiers in a category. [pic] Figure 14.1 Price Tiers in the Ice Cream Market D) Within any tier, there is a range of acceptable prices, called price brands. E) The price brand provides managers with some indication of the flexibility and breadth they can adopt in pricing their brands within a particular price tier. F) The firm has to consider many factors in setting its pricing policy. G) There is a six-step procedure: 1) Selecting the pricing objective. 2)Determining demand. 3) Estimating costs. 4) Analyzing competitors’ costs, prices, and offers. 5)Selecting a pricing method. 6) Selecting the final price. . Step 1: Selecting the Pricing Objective • The company first decides where it wants to position its market offering. The clearer a firm’s objectives, the easier it is to set price. A) A company can pursue any of five major objectives through pricing: 1)Survival. 2)Maximum current profit. 3) Maximum market share. 4) Maximum market skimming. 5)Product-quality leadership. . Survival [pic] Companies pursue
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