Pricing decisions and strategies

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Ivana Michalicova

por Ivana M

Lesson Planner

por Сайёра Оспанова

UNIT 7

por EVELYN ELIZABETH CABRERA PEREZ

Section 3: Market Failures and Externalities

por Brian Cox

WHAT´S THE PRICE

It is the set of monetary and non-monetary sacrifices that a buyer makes in exchange for a certain level of utility

PRICING DECISIONS AND STRATEGIES

INTERNAL CONDITIONS IN PRICING

Costs

Marketing strategies

Objectives

WHAT´S THE OBJECTIVES

After understanding the target market and the time horizon, you should set short, medium and long-term objectives.

Competitor-focused objectives

It is to achieve equal price with the competition

Objectives are set taking into account the prices given by leading companies in the market

It is a short-term objective since it is set as an emergency measure to overcome difficult situations

Sales-focused goals

In order to obtain the best sales figures, the price of the product is raised taking into account demand and costs in the same way.

Maximization of the sales figure

It seeks to gain market positioning for which the lowest possible sale price will be set taking into account the demand and costs

Goals focused on profit

The price is set so that the profit is sufficient taking into account the investment made

Profit maximization

The objective is to obtain the greatest profit or benefit from the sale of the product

FACTORS INFLUENCING PRICE SENSITIVITY

Storage: the more perishable the product, the more important the price.

Perceived quality: when the product is of higher quality, the price is no longer important

Amortized purchases: when the product is a complement to another previously acquired, the price goes to the background

Shared cost: when the cost is shared with others, the price does not matter.

Importance of the price in the final expense: it is more important when it represents a significant expense

Ease of comparing products: the more you can compare, the more importance is given to the price

Knowledge of substitute products: the more they are known, the more importance is given to the price

Uniqueness of the product: the more exclusive the less the price matters

REASONS THAT SHOW THE IMPORTANCE OF PRICE

Perception: the price can be used by consumers to give value to the product

Differentiation: the price can give advantages over the competition

Profitability: this is determined by the relationship between the quantity sold and the price

Sales volume: this is determined by the elasticity of the demand curve

Ways how a company modifies sales prices:

Modify the prizes or discounts

Modify the times and places of payment

Change the conditions of the transfer of ownership

Change the quality of products

Change the quantity of products

Change the amount of money