MGMA01H3 Chapter Notes - Chapter 11: Marketing Mix, Ikea, Market Power
Document Summary
Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Factors that reduce price sensitivity: income, fewer perceived substitutes (disney theme park, concerts, patented tech), unique value/strong brand (lv, bentley), storability of product. Cost-based pricing: involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk (product driven) Markup price = unit cost/ (1-desired rate of return) Value-based pricing uses the buyers" perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set (customer driven)
