THUYẾT TRÌNH VỀ 4Ps Price

Price & Pricing Price: the amount of money that is charged for ‘something’ of value Pricing: method of setting the price for products or service  Pricing is a complicated issue  Pricing relates to:  Supply and demand  Customer perception of product benefits  Competitive environment  Expected margin 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 factors means costs  Setting the right price is one of the marketing manager’s most important tasks   High price – customers not buy products  Low price - producers can not cover costs  High price brings high profits, but not creating demand  Low price attracts customers, but not making high profits Factors that affect price setting       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 Pricing Objectives     To To To To maximize profits increase sales meet competition remain an image MARKUP PRICING Markup Pricing:  Selling price=Cost of buying product+ Amount for profit  Selling price= Unit cost+ (Unit cost x Rate of Return)  Cost – plus pricing: the most common pricing method  The popular method used to establish a selling price  Markup pricing is simple  Markups are often based on experience  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 Markup pricing Ex: Selling price = unit cost+ (unit cost x rate of return) = $4.00+($4.00 x15%) = $4.00 + $0.60 = $4.60 Markup = (unit price- unit cost : unit cost x 100 ) = ($4.60 - $4.00 : $4.00 x100) = $0.60 : $4.00 x 100 = 15% 2.Break-Even Pricing  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 - Variable costs: costs that vary with changes in the level of output - Fixed costs: costs that not change as output is increased or decreased -Total costs: Fixed costs+ variable Costs Break-even point Break-Even Point=       EXAMPLE Fixed costs = $3.000 Variable costs= $2.5 Charge = $10 per haircut    Break-Even Point== 400 units Advantages & Disadvantages of Break-Even Pricing  Advantages: - A quick estimate of how much firm must sell & how much profit can be earned if a higher sales volume is obtained  Disadvantages: - Risky due to ignoring elastic demand of market 3.Market –Based Pricing: price is charged according to the competition of the similar products  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 Pricing Strategies 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        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 -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 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 Single –price tactics: policy of offering all goods & services at the same price Flexible pricing: price tactic in which 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 evennumbered prices to imply quantity Price bundling: marketing two or more products in a single package for a special price  ... pricing: price tactic that uses odd-numbered prices to connote bargains and evennumbered prices to imply quantity Price bundling: marketing two or more products in a single package for a special price. .. services at the same price Flexible pricing: price tactic in which different customers pay different prices for the same merchandise bought in equal quantities Loss- leader pricing: price tactic in... firm  Price brings revenue while other factors means costs  Setting the right price is one of the marketing manager’s most important tasks   High price – customers not buy products  Low price