PowerPoint Slides to accompany Rix Marketing: A Practical Approach 7e

1. PowerPoint Slides to accompany Rix Marketing: A Practical Approach 7e

2. Bargain! You Get What You Pay For Rix Marketing: A Practical Approach 7e Next: What is Price?Chapter Ten: Pricing Strategies

3. What is Price? • The money value of an item • What you pay for what you get Marketers give a special meaning to the term price: • Tangible aspects • quantity, quality, performance and features • Intangible aspects • status, approval, security, peace of mind Rix Marketing: A Practical Approach 7e Next: Strategic Price SettingChapter Ten: Pricing Strategies Learn more on pages 348 - 349

4. Strategic Price Setting Stage 1: Set a pricing goal Profit-oriented Sales-oriented Status quo-oriented Stage 2: Consider costs, demand and competitors Estimate sales around the expected price Consider marketing mix elements Stage 3: Set the base price Cost-based Demand-based Competition-based Stage 4: Adjust the base price Entry price Discounts and allowances Freight charges Fixed or flexible pricing Price lining Psychological pricing Loss leaders Recommended retail price Rix Marketing: A Practical Approach 7e Next: Pricing GoalsChapter Ten: Pricing Strategies Learn more on page 349

5. Profit oriented goals • maximise gross profit • achieve target ROI • Status-quo goals • stabilise prices • meet competition • ‘don’t rock the boat’ Pricing Goals • Sales oriented goals • achieve target sales volume • achieve target market share Rix Marketing: A Practical Approach 7e Next: Factors Influencing PriceChapter Ten: Pricing Strategies Learn more on pages 350 - 352

6. Factors Influencing Price Before setting a base or list price marketers need to consider: • Demand factors • expected price range • elasticity of demand • other marketing mix elements • Cost factors • fixed and variable costs • total cost at different volumes • Competitive factors • are we a price maker or price taker? Rix Marketing: A Practical Approach 7e Next: Elasticity of DemandChapter Ten: Pricing Strategies Learn more on pages 352 - 360

7. Elasticity of Demand Rix Marketing: A Practical Approach 7e Next: Product Cost at Various Levels of OutputChapter Ten: Pricing Strategies Learn more on pages 354 - 356

8. Measuring Product Cost at Various Levels of Output Rix Marketing: A Practical Approach 7e Next: Setting Base PriceChapter Ten: Pricing Strategies Learn more on pages 358 - 360

9. Setting Base Price • In practice, marketers set their base (or list) price by: • Adding a profit margin to cost • Estimating demand (how many will sell) at various prices • Pricing above, below or the same level as their competitors’ prices Rix Marketing: A Practical Approach 7e Next: Break-even Analysis: A Useful ToolChapter Ten: Pricing Strategies Learn more on pages 360 - 370

10. Break-even Analysis: A Useful Tool Rix Marketing: A Practical Approach 7e Next: Marketing Pricing: Price SkimmingChapter Ten: Pricing Strategies Learn more on pages 365 - 366

11. Market Entry Pricing: Price Skimming Setting price at or above our most expensive competitor price and highest customers’ expected price. • Can establish a premium image • Gives price flexibility • Works best when: • new product is distinctive • demand is inelastic • PLC is in the early stages • patents or other technology protect the product Rix Marketing: A Practical Approach 7e Next: Marketing Entry Pricing: Penetration Pricing Chapter Ten: Pricing Strategies Learn more on pages 370 - 371

12. Marketing Entry Pricing: Penetration Pricing Setting a price below our cheapest competitor price and lower level of customers’ expected price. • Can achieve fast high-volume sales • Discourages competitors • Works best when: • demand is elastic • economies of scale are possible • strong and fast competition is expected Rix Marketing: A Practical Approach 7e Next: What Kind of Discount is This?Chapter Ten: Pricing Strategies Learn more on page 371

13. Price Adjustment Strategies Marketers adjust their base prices in various ways: • Discounts and allowances • quantity discounts • trade discounts • settlement discounts • promotion discounts • Geographic pricing • ex-factory • uniform delivered • zone delivered • freight absorption • Other pricing tactics • flexible pricing • price lining • odd pricing • loss leader pricing • recommended retail price Rix Marketing: A Practical Approach 7e Next: What Kind of Discount is This?Chapter Ten: Pricing Strategies Learn more on pages 371 - 382

14. What Kind of Discount is This? Rix Marketing: A Practical Approach 7e Next: Changing prices Chapter Ten: Pricing Strategies

15. Changing Prices • Marketers change their price in order to: • Recover cost increases • Clear excess stock • Win market share • Promote particular products • Achieve sales budgets • Marketers need to consider competitor motives and reactions when making or responding to price changes. Rix Marketing: A Practical Approach 7e Next: Five Minute Quiz Chapter Ten: Pricing Strategies Learn more on pages 382 - 383

16. Five Minute Quiz Define price from a marketing perspective List three common pricing goals Define price elasticity of demand List four types of discounts offered by firms List four alternative ways of allowingfor freight costs in a firm’s price Rix Marketing: A Practical Approach 7e Chapter Ten: Pricing Strategies