| What is the Price [Marketing Mix] | -Money charged for a Good/Service
-The amount that needs to be given to gain access to the Product
-Usually given in Pounds [United Kingdom] |
| Why is the Price so Important? | -Affects Revenue Directly
-Has to make sense with the Other Elements, otherwise the Perception of the Customer will challenge it
-Making a bad choice can lead to a Decrease in Sales and Cash Flow |
| What can Influence the Price? | -Costs to Make
-What Stage the Product is in [Product Life Cycle]
-Market Share
-Marketing Objectives
-Positioning
-Competitors |
| What are the Types of Pricing Methods? | -Competitor
-Penetration
-Promotional
-Cost-Plus
-Skimming |
| What is Price Skimming? | -Setting a high price before any other Competitors come in
-Usually reserved for the Launch of a Product which hasn't got much Competitions because of the Product Possessing
-Customers buy this, to gain Access to the Latest or Best product in the Market |
| Advantages of Price Skimming | -Has the reach of High Profits instantly. This can pay up the Research Costs and Development Costs
-Can have a Reputation for Quality, Encouraging Brand Loyalty
-Profits made can be used for the Next New Product |
| Dis-Advantages of Price Skimming | -Short Lifespan as Competitors will also too launch Products that pressure yours
-Can slow down the Growth of the Product; its Expensive and no more Customers can't/won't pay for it |
| What is Price Penetration | -Offering Low prices on Goods and Services
-Used by New Businesses to Launch New Products; draws Consumers away from Competitors
-Can however be a loss of Profits short term; long term can see the Exposure making Profits |
| Advantages of Price Penetration | -Strengthens the Usage and Loyalty
-Develops long term Profitability of Higher Sales and a Higher Market Share |
| Dis-advantages of Price Penetration | -Short term, will be Low Profits.
-Can be Difficult to Raise the Selling Price in the Future |
| What is Cost Plus? | -Adding a % of the cost of making the Product, or Buying the Product
-Overtime, the Price must relate even more of the Costs, to make a Product
-A popular methods of Cost-Basing is Mark up |
| How high should that Mark Up Percentage be? [Pricing Methods] | -Varies on the Competition and the Price Results in Sales to Customers
-Example; Birthday Card for 60p. Usually its 100% so the total price would be $1.20 [pounds] |
| Advantages and Disadvantages of Cost Plus | Good;
-Guaranteed Profit on a Sale
Bad;
-If set too high, it could be to expensive rather then the Competitors Price. |
| Competitor Pricing, what is it? | -Looks into what the Competitors Charge; giving an idea to what price to set
-Used when a-lot of Competition is present and when there are Many Places to Buy off
-Customers may buy the Cheapest ones, but some others may have a Reasonable Price set in their Heads
-If little Competitions, don't bother with this |
| Advantages of Competitor Pricing | -Prices Lines up with Rivals, making it Attractive to Customers |
| Dis-advantages of Competitor Pricing | -Businesses can not rely on Prices to Attract Customers. It could use Better Quality. Customer Service or Availability.
-Businesses need to Research on the amount that's being charged; increase Costs and lower Profits |
| What is Promotional Pricing | -Short term Pricing method
-This is a Reduction of Price, attracting customers to buy
-Used when Sales have Declined
-Used to sell of Old Stock |
| Advantages of Promotional Pricing | -Sales Volume increases, improving the Cash Flow and Market Share
-Can encourage Customers to Trail a Product, who may become loyal later as the Price Increases |
| Dis-advantages of Promotional Pricing | -Customers may only buy off you if its Discounted
-Brand Image may be Tarnished by a lot of Promotions. |
| What are Loss Leaders? | -Prices that are Set low on Purpose to attract Customers who will buy that. and maybe others Profitable Products
-However chances are they won't leading to a Decrease in Profits |
