Price The charge the product is sold to the consumer at
Price • The price of a product will affect the sales and the perceptions of the consumer • High price high quality
What factors do business need to consider when setting the price? • Costs of making the product/service • Desired return or profit from the product • Price charged by competitors • “novelty” value or kudos of the product • Any government policies or constraints
Long-Term Pricing Strategies • Low Pricing Strategy • Market Pricing Strategy • High Pricing Strategy
Short-Term Pricing Tactics • These are used by business to gain a competitive edge at various stages in the life of the product.
Short-Term Pricing Tactics • Skimming – high price to begin with • Penetration Pricing – extremely low price set to begin with • Destroyer Pricing – price set very low for a time • Promotional Pricing – prices lowered for a short time • Demand-Oriented Pricing – different prices at different times
Short-term pricing • These tactics may be used at various times during the life of the product. • They provide the business with the opportunity to modify the price element of the marketing mix. • They are regarded as tactical decisions as they have short-term impact.
Short-term pricing tactics may be adopted once the business has identified the long-term strategy. • The short-term tactics complement the long-term strategy.
Make sure you can: • Describe long term pricing strategies • Describe and give examples of short-term pricing tactics • Explain that short term tactics complement long term strategy