Marketing Mix - Price
- Created by: caitlyn.hole
- Created on: 20-06-17 09:04
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- Marketing Mix - Pricing
- Price Skimming
- New/ innovative products sold at high prices then dropped considerably after year or so as tech is no longer new
- Used as long-term strategy to keep brand exclusive
- E.g. Apple or Ray-Ban
- Potential customers can be put off by high price
- Used as long-term strategy to keep brand exclusive
- New/ innovative products sold at high prices then dropped considerably after year or so as tech is no longer new
- Penetration Pricing
- Launching a product at low price to gain customers/ market share then gradually increasing as it becomes popular
- Customers expect low price to continue so may lose customers
- Effective in price-sensitive markets
- Works best when firm can from lower costs when producing large quantities
- Launching a product at low price to gain customers/ market share then gradually increasing as it becomes popular
- Dynamic Pricing
- Responds to changes in demand
- E.g. hotel rooms, air travel and rail tickets change as travel date gets nearer, seasonal and time/day
- Predatory Pricing
- Price is deliberately lowered to force another business out of the market
- Illegal in EU and USA
- Price is deliberately lowered to force another business out of the market
- Competitive Pricing
- Companies monitor competitors' prices then set equal or lower price
- Often used by supermarkets
- E.g. Asda refund difference if they are more expensive than other supermarkets (price guarantee)
- Companies monitor competitors' prices then set equal or lower price
- Psychological Pricing
- Based on customer expectations
- E.g. high price could mean high quality
- Insignificant price change can have big psychological impact
- E.g. £9.99 seems a lot better than £10
- Based on customer expectations
- Loss leaders
- Sold at or below cost price
- May lose money but usual make profit indirectly
- E.g. entice leaders into shop so they buy fully-priced items
- Price Discrimination
- Product sold at different prices depending on age of consumer
- E.g. zoo ticket prices vary according to age
- Product sold at different prices depending on age of consumer
- Affected by
- All other P's in marketing mix
- How price sensitive the market is
- Price elasticity of demand
- Availability of substitutes, type of product, age of product, loyalty to brand, and whether it's an expensive purchase
- Stage of the product's life cycle
- Company's objectives
- Price of competitor products
- Price Skimming
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