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Price
Market variable that can be changed most quickly, usually in response to competitor pricing Seen as a financial expression of the value of the product Concept of value: Perceived value = perceived benefits perceived costs Customers motivation to purchase product, first from need/want (I need/want food); second comes from perception of value (I really fancy a McDonalds) Perception of value varies with customers, and can be increased by either increasing the perceived benefits or reducing the perceived costs
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Physical good/service Assurance of quality Repair facilities Packaging Credit Warranty Delivery
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Pricing Objectives
Companies concerned about pricing objectives (one of the 4 Ps) as it directly affects sales/earnings and competitiveness Pricing objectives should fit companys overall marketing strategy Types of pricing objectives:
Profit-oriented: using target return objective Sales-oriented: to get specified share of the market Status quo-oriented: maintain stable prices/competitor activity (especially if satisfied with present situation)
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Pricing Strategies
Full Cost Plus Pricing: (see p 530) Return on Investment: (see p 534) Expansionist Pricing:
Exaggerated form of penetration pricing Setting low prices to establish mass markets, possibly at the expense of competitors Useful when entering new/international markets Variation: a lower cost version offered at a very low price to gain recognition/acceptance (only until this is achieved) When offered in overseas market at prices lower than production cost dumping
charging a high price for a relatively short period skim off customers willing to pay Price lowered when demand from early adopters falls
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Transfer pricing
Where the parties are somehow connected same parent company (usually an issue in cross-border transactions) Using arms length principle
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