Pricing Strategies

Marketing Mix

Price

Objectives

Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of

products. Analyse the appropriateness of different

pricing strategies in a given business.

What are the 4Ps of the Marketing Mix?

Components of the Marketing Mix

Marketing Mix

ProductProduct

PromotionPromotion

PlacePlace

PricePrice

How is the Marketing Mix Used?

Understand the needs and wants of customers (Kolter 2002).

Used by businesses to decide how and where to market a product.

A small business may just hand out leaflets. A large business will look at each of the 8Ps

in detail.

The 4ps must be balanced

Marketing Strategy

Marketing Strategy

Integrated Marketing Mix

Integrated Marketing Mix

ProductProduct PromotionPromotionPlacePlace PricePrice

Different Marketing Mix for Different Situations

Are goods: regular purchases Impulse purchases Emergency purchases

chocolate brands focus on place and promotion.

Type of Purchasing Most Important element of mix

Regular Purchases Product, promotion and price

Impulse Purchases Place, and promotion (including packaging)

Emergency Purchases Place and product

Influences on the Marketing Mix Finance

Technology

Research

Consumer

Where does the Marketing Mix fit into Planning?

Analyse the market

Develop Marketing Mix

Develop Strategies

Write down the 4Ps on your post-it note

QuizThe biggest influence on the marketing mix is?

A. FinanceB. ConsumersC. Technology

Which is a member of the 4 Ps ?A. PeopleB. PlaceC. Public Relations

The marketing mix is the fundamental aspect of marketing?

TrueFalse

Quiz

If I was a small business, which promotion method would I be likely to use?A. National advertising between mainstream TV programs B. Online through FacebookC. National newspaper

Marketing excites me.TrueFalse

Objectives

Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of

products. Analyse the appropriateness of different

pricing strategies in a given business.

Importance of Price – Business Revenue

Revenue = price x units sold

If the price isn't right businesses could:

Lose customers

Lose revenue

Reason for pricing strategies

To break into a new market. To try and increase market share. Increase profit. To make sure all costs are covered.

Pricing Strategies

Types of Pricing Strategy: Cost plus Pricing. Penetration Pricing. Price Skimming. Competitive Pricing. Promotional Pricing. Loss Leader.

Cost Plus Pricing

A company will look at how much a product will cost to produce.

Then add a percentage mark-up profit (money added on top to make a profit).

Easy to apply. Always covers costs. If competitor is selling at a cheaper price

could lose sales.

Penetration Pricing

This would possibly be used when trying to enter a new market.

Price is set lower than your competitors. Customers will try your product and become

regular customers.

Price Skimming

Product is usually a new one and therefore can be sold on the market at a higher price.

Establish the product being of high quality. May put off some customers who can’t afford

it.

Competitive Pricing

Pricing in line with your competitor’s price or just below.

Sales are likely to be high because your price is not over or under priced.

Requires research which costs money. Can end in a pricing war with competitors.

Promotional Pricing

Promotional pricing is pricing the product low for a set amount of time.

Useful for getting rid of unwanted stock. Renew interest in the business if sales are

falling. However, can affect business revenues.

Loss Leader

Aim to capture a large share of the market by charging a low price (below cost).

Short-term the firm will make a loss. However, it will capture a large market share. Longer term will raise the selling price of the

product and make profits.

Missing line task

Market Penetration - Charging a low price to gain market share.

Price skimming - Pricing high to maximise profit margins.

Cost plus - Adding a % of profit onto direct costs. Loss Leader - Selling a product at below its cost. Competitive - Charge above or below competitors Promotional - Low price for a small period of time.

The price is right

Eight scenarios, which pricing strategy would you use and why?

Objectives

Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of

products. Analyse the appropriateness of different

pricing strategies in a given business.

Case study - Homework

Read case on ASDA and £3 jeans. Answer questions, 1-3.

This is due in for Thurday

Objectives

Define the marketing mix. Explain pricing strategies in a given business. Apply different pricing strategies to a range of

products. Analyse the appropriateness of different

pricing strategies in a given business.