3rd Exam

Price

•is the sum of all the values a customer gives up to gain the

benefits of having or using a product or service.

•exchange a certain value for having or using the product.

Pricing Objectives

•_____ are the goals that businesses set when

determining the price of their products or services.

•These objectives guide pricing strategies to align with the

company's overall business and marketing goals.

Profit Oriented Objectives

✓Maximizing Profit: Setting prices to achieve the highest possible

profit.

✓Target Return on Investment (ROI): Pricing to achieve a specific

return percentage.

✓Profit Margin Targeting: Ensuring a set profit margin on each

sale.

Sales Oriented Objectives

✓Sales Volume Maximization: Setting lower prices

to increase the number of units sold.

✓Revenue Growth: Focusing on increasing total

sales revenue, even at lower profit margins.

✓Market Share Growth: Pricing competitively to

gain a larger share of the market.

Competition-Oriented Objectives

✓Competitive Pricing: Matching or slightly

adjusting prices relative to competitors.

✓Price Leadership: Setting prices to influence

market trends.

✓Price War Avoidance: Keeping prices stable to

avoid destructive competition.

Customer-Oriented Objectives

✓ Value-based pricing: Setting prices based on

perceived customer value.

✓Premium Pricing: Charging higher prices to

reflect exclusivity or superior quality.

✓Psychological Pricing: Using strategies like

odd pricing (9.99 php instead of 10 php) to

influence buying behavior.

Social Ethical Objectives

✓Fair Pricing: Ensuring affordability while

maintaining ethical profit margins.

✓Sustainability Pricing: Setting prices that

reflect environmental and social responsibility.

✓Non-Profit or Cost Recovery Pricing: Aiming to

cover costs rather than generate profit

Maximizing Profit

Setting prices to achieve the highest possible

profit.

Target Return On Investment

Pricing to achieve a specific

return percentage.

Profit Margin Targeting

Ensuring a set profit margin on each

sale.

Sales Volume Maximization

Setting lower prices

to increase the number of units sold.

Revenue Growth

Focusing on increasing total

sales revenue, even at lower profit margins.

Market Share Growth

Pricing competitively to

gain a larger share of the market.increase overall market presence.

Competitive Pricing

Matching or slightly

adjusting prices relative to competitors.

Price Leadership

Setting prices to influence

market trends

Price War Avoidance

Keeping prices stable to

avoid destructive competition

Value Based Pricing

Setting prices based on

perceived customer value.

Premium Pricing

Charging higher prices to

reflect exclusivity or superior quality.

Psychological Pricing

Using strategies like

odd pricing (9.99 php instead of 10 php) to

influence buying behavior

Fair Pricing

Ensuring affordability while

maintaining ethical profit margins.

Sustainability Pricing

Setting prices that

reflect environmental and social responsibility

Non-Profit or Cost Recovery Pricing

Aiming to

cover costs rather than generate profit.

New Product Pricing

When companies bring out a new product, they face the challenge of setting prices for the very first time

Price Skimming

high initial price the gradually lower

penetration pricing

low initial price to attract customers

freemium pricing

basic version, free premium features paid

Trial Pricing

low or free price for a limited period

Bundle Pricing

selling multiple products together at a lower price

Product Mix Strategies

• constitutes not only a a single product line but all the products within an organization

• involve pricing different products in a company’s portfolio to maximize sales, profits, or customer satisfaction

product line pricing

different pricing for variations of the same product line

optional product pricing

selling additional accessories for features

captive product pricing

main product is priced low but required accessories

product bundle pricing

selling multiple products together at a discount

by-product pricing

selling secondary products from production to minimize waste

psychological pricing

using pricing techniques to influence perception

cost-plus pricing

one of the simplest ways to price your product

cost based pricing

involves calculating the total costs it takes to make your product, then adding a percentage mark up to determine the final price

value based pricing

• primarily based on a consumer’s perceived value of a product or service

• customer focused meaning companies base their pricing on how much the customer believe a product is worth

competition based pricing

setting prices based on competitors’ strategies, costs, prices, and market

price matching

setting prices equal to competitors

pricing below competitors

undercutting competitors to attract more customers

pricing above competitors

charging more but justifiying it with better service, branding, or unique features

price adjustment strategies

refers to various pricing techniques businesses use to modify their prices based on different factors such as customer demand, market conditions or competitive dynamics

discount and allowance pricing

offering reductions from the regular price

segmented pricing

charging different prices for the same product based on customer segments location or time

psychological pricing

setting prices to appeal emotions rather than logic

promotional pricing

temporary price reductions to boost sales

geographical pricing

adjusting prices based on region or country

2 geographical pricing

country based pricing and regional pricing within a country

dynamic pricing

continuously adjusting prices based on demand and competition

early booking

lower prices

last minute booking

higher prices

high demand, limited seats

price surge

low demand, more seats available

discounts

international pricing

modifying prices for different markets based on local economic conditions, competition, or regulations

distribution channel

a chain of businesses or intermediaries
through which a good or service passes until it reaches the final buyer
or the end consumer

direct channel

allows the consumer to make purchases from the manufacturer

indirect channel

allows the consumer to buy the goods from a wholesaler or retailer

first channel

the longest because it includes producer, wholesaler, retailer, and consumer

second channel

cuts out the wholesaler - where the producer
sells directly to a retailer who sells the product to the end consumer.

third and final channel

a direct-to-consumer model where the
producer sells its product directly to the end consumer.

middlemen

• are also intermediaries

• distribution channel between the producer and the
  consumer is complete.

• They are the furnishers of valuable information to the
  producers about consumer behavior and the changes.
  Allow the manufacturers to concentrate on production only
  and relieve them from the botheration of marketing.
  Render financial help to manufacturers.
  They make available the goods according to the consumers’
  needs, fashion, and tastes.
  They are an important link between the producers and
  consumers

wholesalers

are closer to the producers. ___ buy goods in
bulk and sell them to the retailers in large quantities.

retailers

acquire the goods from the wholesalers and sell
them in small quantities to the consumers

agents

negotiate purchases or sales or both but do not buy the goods with which he she deals

brokers

most commonly found in the food, real estate, and insurance industries, ay represent either a buyer or a seller an are paid by the party who hires them