MKTG1501 Lecture Notes - Lecture 10: Geographical Pricing, Psychological Pricing, Profit Margin
MKTG1501 – Lecture 10- Price Strategies
*Price
- price is the sum of the values consumers exchange for the benefits of having
or using the product or services
- factors influence the price decisions:
1) internal: marketing objectives, marketing mix strategies, costs and firm’s
consideration
2) external: nature of the market and demand, competition or other
environmental factors
- Marketing objectives
a) survival
b) current profit maximisation
c) market share leadership
d) product quality leadership
- Marketing mix strategy: all the price decisions need to consider the factors
such as place, people, promotion and so on.
- Costs
a) Fixed cost: eg, café- rent, equipment, insurances, the cost of the cups
b) Variable cost
c) Total cost
- Competition
a) Pure competition: a market consists of many buyers and sellers trading in a
uniform commodity. Price is decided by the market, not any buyer and seller.
b) Monopolistic competition: a market consists of many buyers and sellers
where a seller can differentiate their offers to the buyers eg, café
c) Oligopolistic competition: a market consists of few sellers which they highly
influence the price of the product and service. There are usually barriers to
enter into the market.
d) Pure monopoly: where a market has only one seller, usually be the
government or government-owned corporation which strictly decide the price
of the product and service
*Cost based pricing–
- cost plus pricing: adding the standard mark-up to the cost of the product
- breakeven analysis and target profit pricing
- value-based pricing: what the consumer will pay
1) based on the buyer’s perception of value
2) is usually the indicator of the quality
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Document Summary
Price is the sum of the values consumers exchange for the benefits of having or using the product or services. 1) internal: marketing objectives, marketing mix strategies, costs and firm"s consideration. 2) external: nature of the market and demand, competition or other environmental factors. Marketing objectives a) survival b) current profit maximisation c) market share leadership d) product quality leadership. Marketing mix strategy: all the price decisions need to consider the factors such as place, people, promotion and so on. Costs a) fixed cost: eg, caf - rent, equipment, insurances, the cost of the cups b) variable cost c) total cost. Competition a) pure competition: a market consists of many buyers and sellers trading in a uniform commodity. There are usually barriers to enter into the market. d) pure monopoly: where a market has only one seller, usually be the government or government-owned corporation which strictly decide the price of the product and service.
