Professional Documents
Culture Documents
Price is a measure of value and the
only element of the marketing mix that
represents revenue
O Ús the most flexible marketing mix element
O Can be changed quickly unlike product
features, channel commitments and
promotions
O Communicates the intended value positioning
to the market
O Decisions are complex and difficult
O Úntroduction
O Setting the Retail Price
O Factors impacting price setting
O Retail mark-ups
O Adjusting the price
O ×he right price is one consumers are willing
and able to pay and retailers are willing to
accept in exchange for merchandise and
services!
O ×he right price allows the retailer to make a
fair profit while providing the consumer with
value satisfaction before, during, and after
the sale!
O Price-setting methods:
O Price-setting objectives: O Markup
O Sales O Competitive
O Profit O Vendor
O Competition
O Price-setting policies:
O Price-setting determinants: O One-price
O Demand O Variable-price
O Competition O Odd-price
O Cost O Unit-price
O Product O Price Lining
O Legal
©
O Discount adjustments O Markdown strategies
O Markon Adjustments O Promotional
O Markdown O Price-line
Adjustments O Markdown Control
O Causes of markdowns
O ×iming of markdowns
O Size of markdowns
O ½conomists don¶t understand price
O Consumers don not accept prices as given
O Consumers interpret price according to prior
knowledge and experience and purchase
decisions are based on perception of price
O Consumers have lower and upper threshold
prices ± below which the price signals inferior
quality, above which it signals inferior value
O Price cues: consumers process prices left to
right rather than rounding (Stiving and Winer
1997, ½mpirical analysis of price endings with
scanner data)
O Hence £299 is closer to £200 than to £300
O Prices ending in odd numbers convey a
deduction or discount (Anderson and
Simester 2003, ½ffects of $19 price endings
on retail sales). Firms with high price images
should avoid this
{
O What value are we providing for customers
O Customer perception of our product
O Perception relative to competitors
O Product costs
O Margin required
O Sales/marketing objectives
O Pricing objectives
Discount
O invoice costs, carriage inwards,
depreciation on unsold goods
O [ ± sales minus cost of goods sold
O r ± gross margin as % of sales
O J ± amount added to cost of goods to give
required selling price (can be expressed as % of cost)
O sales less cost of goods less operating
expenses
O J total reduction on normal RSP for all items
sold
O J
high on slow moving lines (furniture),
low on fast moving lines (grocery)
1. Select the price objective Maybe survival, maximum current profit
maximum market share, market skimming, product
quality leadership