Pricing price policy How do consumers process

Pricing (price policy) • How do consumers process and evaluate prices? • How should a company set prices initially for products and services? • How should a company adapt prices to meet varying opportunities: • When should company initiate a price change?

Price is. . . • Price is the one element of the marketing mix that produces revenue – the other elements produce costs. • Prices are perhaps the easiest element of the marketing program to adjust. • Throughout most of history, prices were set by negotiation between buyers and sellers. Bargaining is still a sport in some areas.

How companies price? • Factors of pricing: Internal factors External factors

Perception of price • Reference prices: comparing an observed price to an internal reference price which customers remember or to an external frame of reference such as a posted „regular retail price. “ • Price-quality inferences: many consumers use price as an indicator of quality • Price endings: Prices that end with 0 and 5 are common in market place. Also ending with „ 9“ is very popular.

The three major considerations in price setting: costs set a flooor to the price. Competitor´s prices and the price of substitutes provide an orienting point. Consumers ´ assessment of unique features establishes the price ceiling.

Selecting the final price • • Impact of other marketing activities Company pricing policies Gain-and-risk sharing pricing Impact of price on other parties

Adapting the price 1. 2. 3. 4. Geographical pricing Price discounts and allowances Promotional pricing Differentiated pricing