THUYẾT TRÌNH VỀ 4Ps Price

 Pricing relates to:  Supply and demand  Customer perception of product benefits  Competitive environment  Expected margin Pricing: method of setting the price for products or servi

Price & Pricing

Price: the amount of money that is

charged for ‘something’ of value

 Pricing is a complicated issue

 Pricing relates to:

 Supply and demand

 Customer perception of product benefits

 Competitive environment

 Expected margin

Pricing: method of setting the price for products or service

 If a price is set too high, sales opportunity

is lost Lost sales mean revenue lost

 If a price is set to low, the firm loses

revenue

 Price is the decisive factor to expand

market share & to generate profits of a

firm

 Price brings revenue while other 3 factors means costs

 Setting the right price is one of the

marketing manager’s most important

tasks

 High price – customers do not buy

 Company’s financial strength

 The financial status of target

customers

 The level of competition

 Price of competitors’ products

 The level of demand from market

 Seasonal factor

Factors that affect price setting

1 Markup Pricing:

 Selling price=Cost of buying product+

Amount for profit

 Selling price= Unit cost+ (Unit cost x Rate

 Markup pricing is simple.

 Markups are often based on experience

MARKUP PRICING

 Advantage: easy to calculate, suitable in

stable economy, as price is higher than

cost, best selling  profit

 Disadvantage: it ignores demand(not

responsive to market fluctuations),

competition, customer’s perception of

product result in overpricing or

underpricing

Ex: 1 Selling price

= unit cost+ (unit cost x rate of return) = $4.00+($4.00 x15%)

 Break-Even analysis : method of

evaluating what sales volume must

be reached before Total Revenue

equals Total Costs

 Break-even Point: sales volume at

a given price that TOTAL REVENUE equals TOTAL COSTS

 Sales above that point : Profit

 Sales below that point : Making a

loss

2.Break-Even Pricing

- Variable costs: costs that vary with

changes in the level of output

- Fixed costs: costs that do not change as

output is increased or decreased

-Total costs: Fixed costs+ variable

Costs

Break-even point

Break-Even Point== 400 units

  

 Advantages:

- A quick estimate of how much firm must sell & how much profit can be earned if a higher sales volume is obtained

Pricing over the market

 Low volume luxury goods

 High income groups want prestige

 Price-Quality relationship

Pricing below the market

 To attract market, to expand market share

Pricing with the market

 To follow the pricing policies of major

companies in industry in industry (price leader)

 To avoid competition/ Pricing wars

3.Market –Based Pricing: price is

charged according to the competition

of the similar products

 Market Skimming Pricing:

‘skimming the cream off the top’

Pricing policy where a firm charges high introductory price as having

unique advantages/ technological

breakthrough to maximize cash

recovery.

Pricing Strategies

 Price skimming may be suitable if:

 You have a distinct & unique product and there is little competition

 You have limited production capacity

 You appeal to market segment that is

insensitive to price

 The high price conveys quality

 There is little economies of scale in

producing more.

 Market Penetration Pricing:

Pricing policy whereby a firm charges a

relatively low price as a way to reach the mass market , to attract or retain

customers Penetration pricing is possible when

 Customers are price sensitive

 Unit production costs can be reduced

 A low price discourages the competition

-Pricing Tactics: allow the firm to adjust for

competition in certain markets.

-Fine-tuning pricing tactics include various sorts

of discounts, special pricing tactics.

Sorts of Discounts

Quantity discount: price reduction offered to

buyers buying in multiple units

Cash discount: a price reduction offered to buyers

in return for quick payment

Trade discount: discount to wholesalers or

retailers for performing channel functions

Pricing Tactics

Seasonal discount: a price

reduction for buying merchandise out of season.

Trade allowance : payment to a

dealer for promoting the

manufacturer’s products.

Special Pricing Tactics

offering all goods & services at the

same price.

different customers pay different

prices for the same merchandise

bought in equal quantities.

Loss- leader pricing: price tactic in

which a product is sold near or below cost in the hope that shoppers will

buy other items once they are in the store.

Bait pricing : price tactic that tries

to get consumers into store through misleading price advertising , then uses high –pressure selling to

persuade consumers to buy more

expensive merchandise.

Psychological pricing: price tactic

that uses odd-numbered prices to

connote bargains and

even-numbered prices to imply quantity.

Price bundling: marketing two or

more products in a single package for a special price.