Marketing Mix – Price
The price element of the marketing mix, is a critical component that directly affects a company's profitability
and market position. Pricing strategy can influence consumer purchasing decisions and brand perception.
Factors affecting to Price;
Pricing Strategies Mark – up percentage added
to costs that makes a profit
for a business when setting
the price
1. Cost-Based Pricing: -
• Also known as cost – plus pricing
• This involves determining the cost of producing a product or service and adding a markup to ensure
a profit.
• It is straightforward but may not always reflect market demand or consumer willingness to pay.
• E.g. -
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2. Penetration Pricing: -
• This strategy involves setting a low initial price for a new product to attract customers and gain market
share quickly.
• Once the product is established, the price may gradually increase.
• There are two main reasons why a business might use this strategy:
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3. Competitive Pricing: -
• In this strategy, prices are set based on competitors' pricing.
• Companies may choose to price their products lower to capture market share or price them higher
to position themselves as premium offerings.
4. Skimming Pricing: -
• This strategy sets high prices for a new product to maximize profits from segments willing to pay a
premium before gradually lowering the price to attract more price-sensitive customers.
5. Destroyer or predatory pricing
• Lowering price temporarily to drive out competition.
• Aim is to reduce the price for a period to make its difficult for competitors to compete.
• If this works well, the rival businesses will leave the market and allow predator to raise prices again.
• As a result, predator will now have a larger market share.
Activity – case study coffee shops (pg 309)
Promotional Pricing
1. Discount and sales
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2. Psychological pricing
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3. Loss leaders
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Other pricing strategies;
1. Dynamic Pricing:
2. Value-Based Pricing: -
3. Bundling and Unbundling
4. Geographic Pricing
5. Economic Factors
Activity pharmaceutical company (pg 310)
