Price

The Marketing Mix

Objectives
• Understand factors affecting a firm’s
pricing decisions
• Discuss the major strategies for pricing
imitative and new products

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Price
• Definition
–The amount of money charged for a product or
service
–The sum of the values that consumers
exchange for the benefits of having or using the
product or service
• Pricing includes not only the list price, but also
discounts, financing, and other options such as
leasing
• Pricing is important but difficult to decide
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Factors to Consider When
Setting Prices

Internal Pricing External

Factors Decisions Factors

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Internal Factors
• Marketing Objectives
–Market positioning
–Survival
–Current profit maximization
–Market share leadership
–Product quality leadership

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Internal Factors
• Marketing Mix Strategy

– Target costing

Price plays a crucial

product-positioning
role in developing the
marketing mix

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Internal Factors
– Nonprice position

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Internal Factors
• Cost

Total Cost = Fixed Cost ＋ Variable Cost

• Organizational Considerations

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External Factors
• The Market and Demand
– Different types of markets
I. Pure Competition
II. Monopolistic Competition( 垄断竞争 )
III. Oligopolistic Competition( 寡头垄断 )
IV. Pure Monopoly( 完全垄断 )
– Consumer perceptions of Price and Value
– The Price-Demand Relationship

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External Factors
• Competitors’ Costs, Prices, and Offers
• Other External Factors
– Economic Conditions
– Resellers
– Governments

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Major Considerations in
setting price
Consumer Price Ceiling No Demand
Perceptions above
this price
of Value

Competitors’ prices and Other

internal & external factors

Product Price Floor No profit

below
Costs this price
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Pricing Strategies
• New-Product Pricing Strategies
 Market-Skimming Pricing( 市场撇脂定价
法)
—Setting a high price for a new
product to skim maximum revenues layer
by layer from the segments willing to
pay the high price

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 Market-Penetration Pricing( 市场渗透定价 )
—Setting a low price for a new product in
order to attract a large number of buyers
and a large market share

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 Status quo Pricing/Go-rating Pricing( 随
行就市定价 )
—Charging a price identical to or very
close to the competition’s price

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Price-Adjustment Strategies
• Discount and Allowance( 补贴 ) Pricing
– Cash Discounts
– Quantity Discounts
– Functional Discounts/Trade Discounts
– Seasonal Discounts
– Trade-in Allowances( 以旧换新 )
– Promotional Allowances( 促销补贴 )

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• Segmented Pricing( 分段定价 )
– Customer-Segment Pricing
– Product-Form Pricing
– Location Pricing
– Time Pricing

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• Value-based
Pricing

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• Geographic Pricing

• Leader Pricing/Loss Leader Pricing

—Attracting customers by selling a
product near or even below cost

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