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Chapter 7: Price as part of marketing mix:
Price: term used to describe how much a customer actually paste receive the product or service upon purchase. There is a range of different pricing policy is used by travelling tourism organisations in different conditions.
Market penetration: usually used in the introduction phase. This is probably the most common pricing policy. When launching a new product into a very competitive market, low prices or said initially to entice customers to try the product. This is also known as trial pricing. The aim is to win a large customer base and generate revenue quickly from a high sales volume.
Market skimming: usually used in the introduction phase. Used when the level of competition is low. It allows the provider to charge a higher price, attracting customers who are comfortable with the role of innovator, which means they are paying a high price to be the first to try something. competitors will then enter the market, forcing the price down and making the product more affordable for a wider range of customers.
Variable pricing: this pricing takes into account the variability of demand. Different prices maybe set for different seasons of the year. High prices are charged during the peak season: when demand is high. Low prices are charged during low season, when demand is low.
Loss leader pricing: usually used in the decline stage. A loss leader is a product that is sold at little or no profit, or even at a loss. It gives customers the impression of goods being cheap and entices them to spend on other more profitable and linked items at the same time, thus benefiting the organisation.
Special offers: a form of promotional pricing. This policy is sometimes used as a form of competitor based pricing, to pull customers away from a rival attraction.
The going rate/competitive pricing: where there is a high degree of similarity between products offered by different organisation, the price may be determined by the going rate.
Prestige pricing: usually used in the introduction stage. This is also known as premium pricing. Where products have an exclusive appeal or are of an exceptional quality, high prices are often set based on the assumption that people will associate high prices with high quality.
Price bundling: also known as product-bundle pricing, this involves pricing a few items of related products into a single bundle.
Factors that determine pricing policies:
Fixed and variable costs: these referred to all the expenses a business place to buy or to produce its products or services. The lowest price that providers should charge is at cost. The majority of pricing policies use cost plus pricing, the plus being the profit needed to be made.
Profitability: this means that profit-seeking organisations operating within the private sector will take a much different approach in determining price policy to use compared with those organisations financed through public sources, as they need to make revenue.
Subsidies, taxation and surcharges: a subsidy is essentially a simple idea or an incentive to work with, the benefit of this to the customer is a reduction in price. taxation can be seen as the opposite of subsidy, this is done to change the behavior of organisations. Surcharges can be defined as hidden costs within the industry.
Competitors: if no substitute products are available, a higher price can be set. The opposite will be done if there is a large number of competitors.
Customer expectation/likely number of customers: price and quality perceptions are closely linked. For many customers, getting value for money is actually more important than the price itself.
Seasonality: products offered in high season tend to be more expensive than those offered at off-peak times.
Economic factors: the state of the global economy has an impact on the price being paid. In times of economic boom, people tend to be willing to spend more on holidays and other activities.
Chapter 7: Price as part of marketing mix:
Price: term used to describe how much a customer actually paste receive the product or service upon purchase. There is a range of different pricing policy is used by travelling tourism organisations in different conditions.
Market penetration: usually used in the introduction phase. This is probably the most common pricing policy. When launching a new product into a very competitive market, low prices or said initially to entice customers to try the product. This is also known as trial pricing. The aim is to win a large customer base and generate revenue quickly from a high sales volume.
Market skimming: usually used in the introduction phase. Used when the level of competition is low. It allows the provider to charge a higher price, attracting customers who are comfortable with the role of innovator, which means they are paying a high price to be the first to try something. competitors will then enter the market, forcing the price down and making the product more affordable for a wider range of customers.
Variable pricing: this pricing takes into account the variability of demand. Different prices maybe set for different seasons of the year. High prices are charged during the peak season: when demand is high. Low prices are charged during low season, when demand is low.
Loss leader pricing: usually used in the decline stage. A loss leader is a product that is sold at little or no profit, or even at a loss. It gives customers the impression of goods being cheap and entices them to spend on other more profitable and linked items at the same time, thus benefiting the organisation.
Special offers: a form of promotional pricing. This policy is sometimes used as a form of competitor based pricing, to pull customers away from a rival attraction.
The going rate/competitive pricing: where there is a high degree of similarity between products offered by different organisation, the price may be determined by the going rate.
Prestige pricing: usually used in the introduction stage. This is also known as premium pricing. Where products have an exclusive appeal or are of an exceptional quality, high prices are often set based on the assumption that people will associate high prices with high quality.
Price bundling: also known as product-bundle pricing, this involves pricing a few items of related products into a single bundle.
Factors that determine pricing policies:
Fixed and variable costs: these referred to all the expenses a business place to buy or to produce its products or services. The lowest price that providers should charge is at cost. The majority of pricing policies use cost plus pricing, the plus being the profit needed to be made.
Profitability: this means that profit-seeking organisations operating within the private sector will take a much different approach in determining price policy to use compared with those organisations financed through public sources, as they need to make revenue.
Subsidies, taxation and surcharges: a subsidy is essentially a simple idea or an incentive to work with, the benefit of this to the customer is a reduction in price. taxation can be seen as the opposite of subsidy, this is done to change the behavior of organisations. Surcharges can be defined as hidden costs within the industry.
Competitors: if no substitute products are available, a higher price can be set. The opposite will be done if there is a large number of competitors.
Customer expectation/likely number of customers: price and quality perceptions are closely linked. For many customers, getting value for money is actually more important than the price itself.
Seasonality: products offered in high season tend to be more expensive than those offered at off-peak times.
Economic factors: the state of the global economy has an impact on the price being paid. In times of economic boom, people tend to be willing to spend more on holidays and other activities.
NoteStudied by 2 peopleNoteStudied by 186 peopleNoteStudied by 14 peopleNoteStudied by 7 peopleNoteStudied by 525 peopleNoteStudied by 5 people