Chapter 11 - Pricing Concepts F24 (1)
Chapter 11: Pricing Concepts
Page 1: Introduction
Marketing Second Canadian Edition Chapter 11.
Pricing Concepts.
Page 2: Learning Objectives
Explain the role of price.
Describe financial calculations and concepts related to pricing.
Identify pricing strategies and tactics.
Legal and ethical considerations in pricing.
Page 3: The Role of Price
Revenue: Total money taken in by the organization.
Page 4: Role of Price in Marketing Mix
Figure 11.1 illustrates the role of price within the marketing mix, connecting price with other marketing elements.
Page 5: Impacts of Price
Price defines:
The product.
The exchange process.
Value perceived by consumers.
Competitive positioning.
Page 6: Further Role of Price in Marketing Mix
Defines Organizational Strategy:
Preferred retail channels.
Direct distribution preferences.
Focus on repeat consumers vs. single purchases.
Value justification for prices.
Page 7: Continued Role of Price in Marketing Mix
Continued Definition of Strategy:
Assessing product potential.
Relationship with market changes.
Affects consumer segmentation.
Impacts marketing promotion and consumer decision-making.
Page 8: Profit and Financial Considerations
Understanding financial calculations helps in pricing strategy.
Profit Defined: Revenue minus product costs.
Page 9: Cost Components
Example of a packaged goods product breakdown:
Ingredients, packaging, labor, manufacturing, etc.
Calculation of total costs leading to retail price.
Page 10: Impact of Pricing Decisions
Internal and external stakeholders affected include:
Accounting, purchasing, sales, legal sectors, shareholders, and consumers.
Page 11: Break-Even Point
Break-Even Point Defined: Where costs equal revenues.
Differentiates between Variable Costs and Fixed Costs.
Page 12: Cost Relationships
Figure 11.3 illustrates the relationship among fixed, variable, and total costs.
Page 13: Break-Even Analysis
Figure 11.4 provides a graphical representation of the break-even point.
Page 14: Sample Break-Even Calculation
Figure 11.5 provides a sample calculation for understanding break-even pricing.
Page 15: Price Elasticity of Demand
Price Elasticity of Demand: Measures consumer response to price changes.
Elastic Demand: Greater percentage change in quantity demanded than in price.
Inelastic Demand: Smaller percentage change in quantity demanded than price change.
Page 16: VisualDifference in Elasticity
Figure 11.6 illustrates the difference between elastic and inelastic demand.
Page 17: Factors of Price Elasticity
Seven factors influencing elasticity include availability of substitutes, competitive activities, and consumer demographics.
Page 18: Pricing for Volume and Profit
Sales volume: Amount of product sold.
Sales volume maximization: Pricing strategy to encourage sales.
Profit maximization: Pricing for maximum profit.
Page 19: Sales or Profit Maximization Benefits
Figure 11.7 shows benefits related to sales or profit maximization.
Page 20: Benefits of Sales Volume Maximization
Market tie-in benefits, profitability at diverse pricing levels, optimization considerations.
Page 21: Benefits of Profit Maximization
Significant concepts include identifying short-term opportunities and understanding pricing dynamics.
Page 22: Other Pricing Strategies
Cost-Plus Pricing: Total costs plus desired profit.
Target Pricing: Aiming for specific returns on investment based on costs.
Page 23: Sample Pricing Calculations
Figure 11.8 displays calculations for cost-plus and target pricing.
Page 24: Pricing Strategies for Consumers
Manufacturers' strategies in retail pricing, ensuring competitive advantages and effective consumer pricing.
Page 25: Pricing for Market Dynamics
Various pricing strategies aimed at competition and market share development.
Page 26: Pricing Structures
Figure 11.10 describes relationships between pricing structures and competition levels.
Page 27: Consumer-Focused Pricing Strategies
Emphasizes consumer perceptions in pricing, with methods like reference and tiered pricing.
Page 28: Price Tactics for B2B Customers
Specific tactics aimed at short-term objectives within a larger marketing plan (e.g., bulk purchase incentives).
Page 29: Consumer Price Tactics
Designed to drive sales, but may negatively affect perception and brand loyalty.
Page 30: Types of Consumer Price Tactics
Promotions, discounts, seasonal pricing, competitor matching, etc.
Page 31: Criticism of Pricing Tactics
Issues such as consumer confusion about product value and potential impacts on brand loyalty.
Page 32: Legal Pricing Issues
Issues like false advertising, price discrimination, and regulatory concerns affecting pricing strategies.
Page 33: Ethical Pricing Issues
Ethical considerations around the true cost of products, captive pricing, and environmental impacts.
Page 34: Special Pricing Situations
Unique pricing strategies including odd pricing, auction formats, and pay-what-you-will models.
Page 35: The Future of Pricing
Shift towards digital payments, increased regulations around tipping, and impact of cryptocurrencies.
Page 36: Summary Questions
Key questions summarizing the chapter's main points on pricing concepts, cost calculations, and elasticity.