Price- Marketing Mix

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  • Price
    • Factors Affecting price
      • objectives pricing strategy chosen
      • marketing mix complimets or other factors
      • fixed and variable costs
      • competition price of competitor products
      • perceptions/exp   ectations of what customers think its worth
      • market segment- charge different for different markets
      • legal constraints
    • Pricing Strategies
      • Cost plus pricing(mark up pricing) = calculation of average cost (AC) plus a mark up.
        • AC=total cost/Output
      • Contribution = prices set to ensure coerage of variable costs and a contribution to the fixewd costs
        • contribution= selling price - variable costs
      • Price  Discrimination = charging a different price for the same good/service in different markets. Market must be impenetrable.
      • Market/price Skimming = high price, low volume. skim profit from market, for products with short lifecycle or face competition.
      • PsychologicalPricing = used to play on consumetr perceptions.
      • Penetration Pricing = low price to secure high volume. Typical in mass market products(food). for products with an anticipated long lifecycle.
      • Loss leading = goods/ services deliberately sold below cost to encourage sales elsewhere in business.
      • Destroyer/ Predatory Procing = Deliberate price cutting offer of 'free gifts' to force rivals out of business or prevent new entrents. (illegal if can be proved)
      • Value Pricing = prices set in accordance with customer perceptions about the value of service/product
      • Tender Pricing =  Firm submits price for carrying out the work. Purchaser then chooses which represents best value. Mostly done in secret.

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