Marketing Mix-Marketing Mix-PricePrice

5/27/15

PricePrice

• A measure of what must be given up in order to take possession or use of something else.•A price is a price is a price• tuition, fee, ticket, rent, toll, ….

PricePrice

• Marketers love numbers! Cha-ching!

• Profit = Revenue - Cost• Costs/Expenses = Fixed costs + Variable costs• Revenue = Price per Unit x Units Sold• Break Even: Total Revenue = Total Costs

PricePrice• Perspectives• Consumer - something that signals value• Business - used to meet financial

goals/obligations• Government – regulations (may increase

costs)• Competition - duplicated, undercut• Trends-consumers want to save money• International Markets-government

regulations, competitive pressure• Economy-Recessions = Cut prices and profit

margins; reposition brands as bargain brands

PricePrice

• Law of Demand-As prices increase, demand decreases (Exception=luxury items)

• Elastic Demand- Demand where changes in price have large impact on amount demanded (substitutes, colas)

• Inelastic Demand-Demand where changes in price have little impact on amount demanded (limited substitutes, gasoline)

PricePrice• Practices• New Products

• Skimming (High) • Penetration (Low)

• Current• Odd/Even- $12.99• Loss Leader-Free carrots with $10+• purchase• Bundled-PC with Monitor for 1 price• Prestige Pricing-Set price high for status• Watches (Rolex watches)• Captive Pricing-Items used together (ink• and printer )