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The marketing mix

Or the 4 Ps of

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The marketing

The marketing mix or 4 Ps
of marketing:

Decisions about these are
based on the results of
market research

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The main pricing strategies
Competitive pricing

Cost-plus pricing

Penetration pricing

Price skimming

Destroyer pricing

Price discrimination

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Cost-plus pricing

This is the simplest pricing
strategy and is aimed at
ensuring the business
covers its costs and makes
an acceptable profit. The
total costs of producing one
unit of the product are
calculated to which is
added the required profit
margin. This gives the
selling price.

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Where the amount of
competition in the market
is strong so customers have
a wide choice of suppliers
to buy from businesses
must set their prices close
to the prices of competitors,
having regard to the
quality of the product and
any unique selling points

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In penetration pricing the
product's price is set
significantly lower than
any competitors' prices.
This pricing strategy may
be used where the objective
is to enter or capture a
larger share of the market,
but may yield a low profit
or even a loss in the short

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Price skimming

Where a new product is
likely to generate a high
volume of initial sales
(because it is a new
product) a high price may
be charged in order to
maximise profits. The price
will be reduced when the
initial high demand has

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Destroyer pricing

A destroyer pricing
strategy involves setting a
price so low that
competitors cannot match
it. In this way they will
lose customers and be
driven out of the market.
The price can then be
raised without threat of

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Some times it is possible to
discriminate between types
of customer for the same
product, perhaps based on
usage or quality. Car
insurance companies, for
example, commonly
discriminate on the basis of
age and perceived risk.

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This is a beautifully presented set of notes on the marketing mix. They can be used as notes or to create your own revision tools.

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