Marketing 2

Price

is the amount that a customer pays for product and services.

Sales

total amount that a company gets based on quantity sold multiplied with selling price.

Revenue

total income/ profit that the company keeps after all the expenses have been paid for.

Fixed Costs

costs incurred due to the operations of the business and do not fluctuate with volume of sales.

Profit Margins

level of income that is desired by the company.

Variable Costs

costs that vary based on volume or quantity.

Break-even Point

the point wherein total cost is equal total revenue.

Costs. 

The setting of prices should incorporate a calculation of how much it costs the organization to produce the product or the service. 

Organizational and Marketing Objectives

Companies get into business for survival, profit maximization, high rate of return of investment

Other Marketing Mix Variables.

Price is affected by the interplay of the other variables in the marketing mix.

Buyer Perceptions of Value and Price.

Buyers have different perceptions of product quality and value based on branding and image.

Competition

Knowing what competition offers is an important factors in the success of a business

Government Regulations and Taxes.

ome government regulations and taxes can either cause a company to maintain its low prices or increase its prices.

Nature of the Market and Demand

Tourism caters to a highly segmented marketplace.

Pricing in Different Markets.

Different markets have a different levels of price sensitivity.

Price Elasticity of Demand.

Price increases or decreases normally have an effect on the level of sales of the product.

Other Environmental Factors.

Other environmental factors that may be beyond the company’s control can affect pricing

Survival.

A company may be experiencing a deep crisis that the most basic reason for its marketing efforts is merely to survive.

Current Profit Maximiztion

Some companies seek to use marketing for short term financial gains.

Market Share Leadership.

Some companies build on marketing strategies that will help company gain a huge market share and become a market leader in its product category.

Brand Equity Growth

Establishing a positive brand image leads to high awareness and perception of quality.

Product-Quality Leadership

Some companies want their brands to be associated with high quality.

Cost-based Pricing.

is an approach that aims to cover costs and make a profot.

Break-even Analysis and Target Profit Pricing.

This kind of pricing approach is when price is determined using break-even price and projecting a target profit. 

Buyer-based Pricing (Value-based)

Some companies base their prices on the product's value as perceived by the consumers.

ompetition-based pricing.

This approach looks at what price competitors are putting on their products and services

Pricing strategies

are ways by which tourism busineses offer products and services at the "right" price.

Prestige Pricing

is used when the product or service is positioned to be luxurious and elegant.

Market Skimming Pricing

ompanies employ the market skimming pricing strategy when the market is price insensitive. 

Market Penetration Pricing

Market penetration pricing is used when setting a low initial price to penetrate the market quickly and to attract many buyers for a large market share.

Product Bundling Pricing 

Product bundling is a strategy used to attract buyers to purchase because of the reduced rate of the bundle compared to the total cost of the items if purchased individuall

Volume Discounts

Volume discounts are rates given to frequent or high volume users to attact them to purchase the products.

Discounts Based on Time of Purchase

This strategy addresses the seasonality aspect of the tourism product.

Discriminatory Pricing

Defined discriminatory pricing as the segmentation of the market and pricing differences based on price elasticity characteristics of the segments.

Psychological Pricing 

Psychological aspects like prestige references prices, round figures, and ignoring end figures are used in pricing.

Promotional Pricing

Promotional pricing offers discounts and short-term incentives especially during the introductory stage of the product or during special activities such as anniversaries or festivals

Revenue management

is a systematic approach to matching demand for services with an appropriate supply in order to maximize revenues

Yield management

is a form of dicriminatory pricing wherein some of the market segments pay higher or lower prices than other tourists for the same tourism products

Market Recovery through Price

Some destinations that have loss market share through different external and internal reasons may recover from their loss through price combined with effective promotions.

Dealing with Price Changes

Know when to initiate a price cut or a price increase.