Slide 1: Title Slide

● Title: The Marketing Mix: Price

● Subtitle: Understanding the Role of Price in Business Strategy
● Your Name: Vasu Rakholiya
● Subject: Business Studies

Slide 2: Introduction to Price in the Marketing Mix

● Theory:
○ Price is a key component of the marketing mix, alongside product, place, and
promotion.
○ It refers to the amount customers are willing to pay for a product or service.
○ The price must reflect the value customers place on the product and align with
the business's objectives.
● Explanation:
○ Price is critical in shaping demand. If a product is priced too high, demand may
decrease, while a lower price can attract more customers.
○ Real-life Example: Apple charges a premium for its products, creating a sense
of exclusivity and superior quality. This pricing strategy supports its brand image
and drives demand from customers who perceive the product as a luxury.

Slide 3: Importance of Price

● Theory:
○ Price impacts customer perception, demand, revenue, and profits.
○ It can also establish a psychological image of the business, positioning it as
either a high-end or budget-friendly brand.
● Explanation:
○ Setting the right price is crucial in determining the overall profitability of a
business. A price that is too low might not cover costs, while a price that is too
high could deter customers.
○ Real-life Example: Louis Vuitton prices its products very high, creating a
perception of exclusivity and luxury. This pricing strategy allows the company to
maintain high profit margins while targeting a niche market of high-income
customers.

Slide 4: Factors Affecting Pricing Decisions

 ● Theory:
○ Pricing decisions are influenced by various factors:
■ Costs of production: A price must cover both variable and fixed costs.
■ Competitive conditions: The level of competition in the market can
influence pricing strategies.
■ Business and marketing objectives: The price must align with the
company's goals, whether it’s market penetration, brand positioning, or
maximizing short-term profits.
■ Price elasticity of demand: Determines how sensitive customers are to
changes in price.
● Explanation:
○ Real-life Example: Microsoft, with its monopoly on Windows operating systems,
has the flexibility to set higher prices without significantly reducing demand.
○ Real-life Example: In perfect competition, such as local grocery stores,
businesses must set similar prices to competitors to remain competitive and
avoid losing customers.

Slide 5: Price Elasticity of Demand

● Theory:
○ Price elasticity of demand refers to how demand changes when there is a change
in price.
■ Elastic demand: When demand significantly changes due to a small
change in price (usually for non-essential or luxury goods).
■ Inelastic demand: When demand remains relatively unchanged despite
price increases (typically for necessities or products with few substitutes).
● Explanation:
○ Real-life Example: Coca-Cola has inelastic demand. Consumers continue to
purchase the product even if prices rise because it is a widely trusted brand with
few substitutes.
○ Real-life Example: Luxury products like Rolex watches have inelastic demand.
Customers are willing to pay high prices due to the brand's prestige and
exclusivity.

Slide 6: Pricing Methods - Cost-Based Pricing

● Theory:
○ Mark-up Pricing: A fixed percentage is added to the cost of production to
determine the selling price.
○ Cost-plus Pricing: Price is determined by adding a fixed profit margin to the unit
cost.
 ○ Contribution-cost Pricing: Prices are set based on the variable costs and a
contribution towards fixed costs.
● Explanation:
○ Real-life Example: Supermarkets often use cost-plus pricing for products like
milk, where a set percentage is added to the cost to determine the retail price.
○ Real-life Example: Airlines often use contribution-cost pricing to ensure that their
variable costs (fuel, maintenance) are covered while also contributing to fixed
costs (aircraft leasing).

Slide 7: Pricing Methods - Competitive Pricing

● Theory:
○ Prices are set based on competitor prices. This method is often used in
oligopolistic markets, where businesses monitor competitors to maintain a
competitive edge.
● Explanation:
○ Real-life Example: Gas stations often set their prices based on nearby
competitors, making sure they don’t charge significantly higher prices, which
could drive customers to the competition.

Slide 8: Advantages and Disadvantages of Cost-Based Pricing

● Theory:
○ Benefits:
■ Easy to calculate and ensures all costs are covered.
■ Helps maintain consistency in pricing.
○ Drawbacks:
■ Does not consider competitor prices or customer willingness to pay.
■ Could lead to prices that are either too high (reducing sales) or too low
(not covering costs).
● Explanation:
○ Real-life Example: Large retail chains like Walmart often use cost-plus pricing
because they can buy in bulk, ensuring a consistent profit margin without
worrying about competitors’ pricing as much.

Slide 9: Loss Leader Strategy

● Theory:
 ○ Involves setting a low price for certain products to attract customers, hoping they
will purchase other, more profitable items.
● Explanation:
○ Real-life Example: Supermarkets often sell items like milk or bread at a loss,
knowing that customers will also buy other high-margin items like snacks,
toiletries, and drinks.

Slide 10: Market-Oriented Pricing

● Theory:
○ Prices are set based on market conditions, competitor prices, and customer
willingness to pay.
○ It is especially common in industries where products are not significantly
differentiated, and price competition is fierce.
● Explanation:
○ Real-life Example: Airlines, like Ryanair, use dynamic pricing to adjust ticket
prices based on demand. During peak seasons or times, they increase prices,
while during off-peak periods, prices are lowered to fill seats.

Slide 11: Psychological Pricing

● Theory:
○ Psychological pricing involves setting prices slightly below a whole number, such
as $9.99 instead of $10, to make the price seem lower and encourage purchase.
● Explanation:
○ Real-life Example: Retailers like Walmart use psychological pricing, pricing
items at $9.99 instead of $10 to make the item seem more affordable, even
though the difference is minimal.

Slide 12: Price Discrimination

● Theory:
○ Price discrimination involves charging different prices to different customer
groups for the same product.
○ This strategy can maximize revenue and reach a broader market.
● Explanation:
○ Real-life Example: Movie theaters charge lower prices for children and senior
citizens, while still maintaining high prices for adults. Similarly, transportation
companies like bus services often offer discounts for students or the elderly.
Slide 13: Pricing Strategies for New Products

● Theory:
○ Penetration Pricing: Setting a low price initially to attract customers and build
market share.
○ Price Skimming: Setting a high price initially to maximize revenue from early
adopters before lowering it over time.
● Explanation:
○ Real-life Example: Netflix used penetration pricing by offering a low introductory
price to attract customers quickly, while luxury brands like the iPhone use price
skimming to maximize profits from early adopters who are willing to pay high
prices.

Slide 14: Evaluation of Pricing Decisions

● Theory:
○ Pricing decisions are influenced by market research, competition, and consumer
willingness to pay.
○ Firms must adapt their pricing strategies to suit external market conditions and
business objectives.
● Explanation:
○ Real-life Example: In the fashion industry, brands like Zara frequently change
prices depending on seasonal trends, consumer demand, and competitor pricing
to maximize sales and profits.

Slide 15: Additional Issues in Pricing Decisions

● Theory:
○ Pricing decisions are influenced by factors like the level of competition (perfect
competition, monopoly, oligopoly) and market conditions.
○ Businesses must also consider non-price competition such as product
differentiation or promotional campaigns.
● Explanation:
○ Real-life Example: In an oligopoly, companies like Apple and Samsung often
compete based not only on price but also on innovative features, brand loyalty,
and advertising campaigns.
Slide 16: Conclusion

● Theory:
○ Price is one of the most important aspects of the marketing mix as it directly
affects demand, revenue, and profitability.
○ A well-set price can help a business achieve its marketing objectives, whether it’s
building market share, positioning the brand, or maximizing profits.
● Explanation:
○ Real-life Example: Businesses like Amazon and Tesla use dynamic pricing
strategies to adjust their prices based on demand, competition, and customer
preferences, ensuring they remain competitive and profitable.

Slide 17: Thank You

● Text: Thank you for your attention!

● Image: Include a relevant image or brand logo (e.g., a logo from Apple or a visual
related to the marketing mix).