Notesale: Turn your study into money

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Pricing
Intro
- Setting the right price is an important part of effective marketing
...
)
- Price is also the marketing variable that van be changed most quickly, perhaps in
response to a competitor price change
Pricing methods
- Cost plus pricing
- Adding up cost of raw materials and labour of producing a new prpoduct
- Add on a mark up for profit ( percentage of the cost )
- (+) Quick and simple way of pricing
- (+) Ensure sales revenue will cover cost
- (-) Doesn’t consider market needs when considering a price
- (-) Doesn’t consider indirect costs
- Penetration pricing - business trying to grab a foothold in the market
...
Encourages consumers and retailers to purchase in large quantiies
...
Therefore company can grab a
large slice of the market
- (-) Not suitable for products with short life cycles - not enough time to recover lost
revenue from the initial low price
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g first digital watch £50-60
- Promotional price
- Buy one get one free, half price! 25% off !
- Increase sales in the short term
- Clearing stock
- Undercut a rival
Costs
Fixed! !
1000 ! !
!
+ Variable! £25 per unit
Total costs! !
!
!

£10
£25
£35

Competitive-based pricing
Monitoring prices of direct and indirect competitors
- Essential in the UK grocery market due to the competitive intensity
- Price sensitive consumers might have low switching costs and thus look to shop
elsewhere id prices are not inline or competitive
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Higher profit margins but
lower sales volume
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99
- Paint balling - hidden
Product line
- A variety of the same product that a business produces for customers of a particular
market
Product Mix
- Describes the variety of different product lines that a business produces
Product range
- Refers to all the product lines of a firm’s product mix
Classification of Products
- Consumer products
- Fast moving consumer goods (FCMG) - LPM
- Everyday convenience products sold in retail outlets
...
May carry a high profit margin but may also be heavily discounted
towards end of ‘life’
- Consumer Durables - HPM
- Purchased irregularly, last a long time, tend to be expensive
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Include soft foods that wear out more quickly
Product
- ‘Product’ refers to the functions and features of a good or service
- Should satisfy the needs of the customer
- May have a Unique Selling Proposition (USP )
- ‘Product’ also includes a range of factors such as packaging, quality, warranties , aftersales service and branding
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Stages of a product lifecycle
Development - high costs but no sales
Launch - high expenditure on promotion and product development
Growth - sales increase and product should break even
Maturity - sales stabilize , less expenditure on promotion needed, revenue & profit should
be high
Decline - sales decline, extension strategies can be adopted or the product withdrawn

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