Price

1
Price

• Topic 3.1

2
The marketing mix price

• Market price where demand meets supply
• Increases when demand increases
• Increases when supply falls
• Only useful for a limited range of products
• Cost plus pricing
• Calculate the unit cost taking into account all
  fixed and variable costs and add on a mark-up for
  profit
• Competitive pricing
• Look at competitors price and match or slightly
  undercut it.

3
The marketing mix price (continued)

• Loss leaders
• Selling at unit cost price or even below to tempt
  people to come into the shop and buy it and other
  more profitable items, used in supermarkets
• Penetration pricing
• Used when entering an established market with a
  new product. Initially sell at a very low price,
  then raise it when the product is established

4
The marketing mix price (continued)

• Price skimming/creaming
• Used when making a technical product in a new
  market. The price is initially high to recoup
  the research and development cost, then lowered
  once sales increase.
• Price discrimination
• Used by companies who can sell the same product
  at different prices to different markets e.g.
  telephone charges peak and off peak
• Consumer led
• Producer has to sell at what the consumer deems
  to be an appropriate price