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13 Cards in this Set
- Front
- Back
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Factors to consider when setting price |
1. Internal factors 2. External factors |
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Internal price factors |
1. Marketing objectives 2. Marketing mix 3. Costs 4. Organization considerations |
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External price factors |
1. Nature of demand and market 2. Consumer perception of price and value 3. Analysing price-demand relationship 4. Price elasticity of demand 5. Competitors' price and offers 6. Other environmental factors |
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Unique value effect |
you are different from your competitors |
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substitute awareness effect |
unawareness of substitutes makes you less price sensitive |
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business expenditure effect |
when someone else pays you're less price sensitive |
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End-benefit effect |
you're more price sensitive when the price of one product accounts for a large share of the total costs |
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total expenditure effect |
the more you spend, the more sensitive yoy are to the product's price |
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sunk cost effect |
if you have an investment in products that you are currently using, you are less likely yo change due to price |
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price quality effect |
you tend to equate price with quality |
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General pricing approaches |
1. Cost based pricing 2. Break even analysis & target profit pricing 3. Value based pricing 4. Competition based pricing |
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Reasons for a company to cut prices |
excess capacity, cant increase demand through promotion, product improvement and desire to dominate market. |
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Reasons for company to increase price |
cost inflation and excess demand |
