Pricing Ch 11.docx

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Management and Organizational Studies
Management and Organizational Studies 2320A/B
Angela White

Pricing 2292012 104000 AM Chapter 11What is a PricePricethe amount of money charged for a product or service the sum of values customers exchange for the benefits of having or using the product or serviceMajor factor affecting the buyers choiceOnly element in the marketing mix that produces revenuePlays a key role in creating customer value and building customer relationshipsFactors to Consider When Setting PricesCustomer perceptions of value o When customers buy a product they exchange something of value to get something of value in return o Effective customeroriented pricing involves understanding how much value consumers places on the benefits they receive from the product and setting a price that captures this value o Price ceilingthere is no demand above this price o Price floorthere are no profits below this pointValuebased pricingsetting prices based on buyers perceptions of value rather than on the sellers cost price is considered along with other marketing mix variables before the program is setGoodvalue pricingoffering just the right combination of quality and good service at a fair priceEveryday low pricing EDLPinvolves charging a constant everyday low price with few or no temporary price discountsHighlow pricinginvolves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected itemsValueadded pricingattaching valueadded features and services to differentiate a companys offers and charging higher prices
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