Page 159 - E1 Integrated Workbook STUDENT 2018

The market planning process and the marketing mix

Pricing

6.1 Factors influencing price – the 3Cs

Cost – the company will want to cover its cost and make a profit.

Customers – how much are they willing to pay?

Competitors – how much do they charge for similar products?

6.2 Pricing strategies

Pricing strategy  Explanation

Skim pricing A high price is set initially to benefit from those who want to
be early adopters.

Penetration pricing A low price is set initially in order to gain market share.

Perceived quality A high price is set to reinforce a high quality image.
pricing

Follow the leader The organisation bases its price on that of a competitor who
pricing is a price leader.

Cost-plus pricing The price is based on cost plus a % profit.

Loss leader pricing Product is sold at a loss in order to gain customer loyalty or
more sales of other products.

Price discrimination The organisation charges different prices for the same
product in different segments.

Variable pricing The price is adjusted to increase demand in off-peak
periods.

Illustrations and further practice

Now try TYU 4 from Chapter 11.

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