chapter 14

price

as the overall sacrifice a consumer is willing to make to acquirea specific product or service

the 5 c’s of pricing

1. Company objectives

2. customers

3. costs

4. competition

5. channel members

what are the four pricing orientations

1. Profit orientation

2. Target profit pricing

3. maximizing price

4. target return pricing

profit orientation

making a profit by specifically by focusing on target profit pricing, maximizing profits, or target return pricing

target profit pricing

when they have a particular profit goal as their overriding concern

maximizing profits

If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized

target return pricing

• Other firms are less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments.

• This approach focuses on achieving a specific return on investment (ROI) over a set period.

sales orientation

set prices believe that increasing sales will help the firm more than will increasing profits

premium pricing

the firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best or for whom price does not matter

competitor orientation

they strategize according to the premise that they should measure themselves primarily against their competition. Such an approach is prevalent in the dollar store segment, adding value

competitive parity

which means they set prices that are sim-lar to those of their major competitors

consumer orientation

when it sets its pricing strategy based on how it can add value to its products or services