Mktg

• Profit Oriented
• Sales Oriented
• Status Quo

• Profit Maximization: setting prices so that total revenue is as large as possible relative to total costs
• Satisfactory Profits: attain a level of profits consistent with the level of risk the company faces
• Target Return on Investment: (ROI) a % that puts a firm;s profits into perspective by showing profits relative to investments

• Market share: a company's product sales as a % of ttl sales for that industry.
• Sales Maximization: ignores profits, competition and the marketing environment as long as sales are rising.

Seeks to maintain exissting prices or to meet the competitiion's prices. Passive policy.

• Availability of Substitutes
• Price relative to Purchasing power
• Product Durability
• A Product's Other Uses
• Rate of Inflation

• Cost: How much do we need to charge to cover our costs?
• Demand: How much demand will there be for our product at a certain price?

• Establishing Pricing Goals/Objectives
• Estimate demand, costs & profits
• Choose pricing strategy to determine base price
• Fine-tune base with pricing tactics

• Price Skimming
• Penetration Pricing
• Status Quo Pricing

Works best with electronics...denotes a high price relative to the prices of competing products, often used for new products when the product is perceived by the target market as having unique advantages.

Charges a relatively low price for a product as a way to reach the mass market. Tends to be effective in a price-sensitive market ex) Walmart.

Meeting the competition or going rate pricing.

• Product is perceived to have unique advantages
• Competitors can't easily copy the product
• Significant segment of market are ready to pay higher price (innovators and early adopters)

• Low prices quickly grow sales & market share
• Discourages competition
• May encourage market growth - more buyers enter market
• Lower profits per unit - high volumes needed for profitability

When large companies are forcing small companies out of business by setting prices unreasonably low...then, once the competition is gone, they immediately raise their prices again.

• A series of pricing for a line of merchandise that creates a perceived separation between different models:
• "our base model"
• "our premium model"
• "our super premium model"

• Relatively low price and profit margin for initial investment then higher prices and profit margins for supplies.
• (Printers & Ink Cartridges)

• Bundling: one price for a package or one or more goods(internet+cable+phone) - More difficult to comparison shop
• UnBundling: charging for services/products previously included in bundles(airlines bag check fees)

• Flat-rates (Netflix)
• Pay-per-usage (Pay per view)
• Two-part pricing

Based on assumptions that consumers see odd prices as a signal of a bargain therefore buy more at $9.99 than at $10.