Week 11 Summary.docx

PLC Price/quality relationship Uncertain Introduction Growth Consumers tend to rely on Maturity price to indicate Decline quality ("You get Competition what you pay Other firms for. enter market Price wars Large customers Demands pressure of Price suppliers for price reductions arge Convenience customers and guaranteed Selling against margins the brand Exclusive distribution Price used as a promotion use Consumers Distribution shopping tool bots to hunt for bargains Increased competition Promotion Internet auctions strategy Internet and extranets PLC Price/quality relationship Uncertain Introduction Growth Consumers tend to rely on Maturity price to indicate Decline quality ("You get Competition what you pay Other firms for. enter market Price wars Large customers Demands pressure of Price suppliers for price reductions arge Convenience customers and guaranteed Selling against margins the brand Exclusive distribution Price used as a promotion use Consumers Distribution shopping tool bots to hunt for bargains Increased competition Promotion Internet auctions strategy Internet and extranets Week 11 Summary: Price Management Marketing Mix – 4 P’s Product Price Place Promotion What About Price? What is a good price to the marketer? “As close to the maximum a customer should pay” Product life cycle = PLC Price needs To… • achieve the financial goals of the company –profitability • fit the environment – will customers buy at that price? • support the product’s positioning • be consistent with other variables of the marketing mix$3.00 $2.75 $2.50 $2.25 $2.00 $1.75 a $1.50 $1.25 $1.00 Change in Price 1 3 5 6 7 8 9 Quantity Demanded $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 a $1.50 $1.25 $1.00 Change in Price 1 3 5 6 7 8 9 Quantity DemandedPrice Elasticity and Demand ELASTIC – As the price decreases the demand increases Price Elasticity and Demand • Availability of substitutes – the more substitutes available, the greater the elasticity. • Degree of Necessity or Luxury – Luxury products have higher elasticity than necessities. Habit forming products can become “necessities”. • Proportion of Income – Products that represent a