Professional Documents
Culture Documents
Pricing
1. Describe the dual role of pricing.
2. Explain pricings role as an implicit
promotional element.
3. List and describe the unsophisticated
and sophisticated pricing approaches.
4. Explain the concept of target pricing.
Competitive approach
Follow-the-leader approach
Intuitive approach
Traditional or rule-of-thumb approach
Target pricing
Price discounting and discrimination
Promotional pricing
Cost-plus pricing
New-product pricing
Price lining
Psychological and odd pricing
Leader pricing
Multistage approach
Target Pricing
Target pricing is where the price is set
in terms of a specific return on
investment that the company wants to
achieve. It is an example of a pricing
approach based on a profit-oriented
objective.
Break-Even Analysis
Break-Even Analysis
Break-even analysis is used in pricing to
determine the level of profitability from
an assumed selling price, when the total
fixed costs and variable cost per unit are
known.
The break-even point is determined, that
is where the selling price and demand
volume produce revenues that exactly
equal fixed and variable costs.
Nine Cs of Pricing
1. Customer characteristics
2. Corporate objectives
3. Corporate image and positioning
4. Customer demand volumes
5. Costs
6. Competition
7. Channels
8. Complementary facilities and services
9. Consistency with marketing-mix
elements and strategy