The Marketing Mix - Essential
Revision Notes
Marketing Mix – The Price
The price of what you sell is indispensable to whether
people buy it or not.
The Price of a Product will depend on a Range of Factors.
● The Cost of Producing a Unit
● Competitors
● The Company’s Objectives
● The Level of Demand
● The Stage in the Product Life Cycle
Pricing Strategies for New Products
When a product is first introduced into the market, the
business will decide what price to charge.
You can use:
● Penetration pricing – Uses a low price to enter the
market and gain market share.
● Price skimming – Using a higher price to enter the
market.
● Competitive pricing – Some firms set their price at
the same levels as their competitors.
Pricing strategies for Existing Products
For firms already competing in the market, pricing
strategies may include:
, ● Price leadership – This occurs when a firm dominates
the market, and other competitors follow its lead.
● Predatory pricing happens when a firm sets out to
destroy (or weaken) the competition through low
prices.
Pricing Methods
Pricing methods are ways in which businesses decide on
the price they charge for a product. Common methods
include:
● Cost-plus pricing – This pricing method considers
the total cost per unit. It then adds on a percentage
to get the final price.
● Contribution pricing – The contribution of a product
is the difference between the selling price and the
variable cost per unit.
● Price discrimination – This happens when different
prices are charged for the same good or service.
Pricing Tactics
Pricing tactics are short-term policies aimed at achieving
a particular objective. These include:
● Loss leaders – A loss leader is a product sold at a
loss to generate business for other products sold by
the firm.
● Psychological pricing occurs when products are sold
at prices intended to make customers think they are
a bargain.
Revision Notes
Marketing Mix – The Price
The price of what you sell is indispensable to whether
people buy it or not.
The Price of a Product will depend on a Range of Factors.
● The Cost of Producing a Unit
● Competitors
● The Company’s Objectives
● The Level of Demand
● The Stage in the Product Life Cycle
Pricing Strategies for New Products
When a product is first introduced into the market, the
business will decide what price to charge.
You can use:
● Penetration pricing – Uses a low price to enter the
market and gain market share.
● Price skimming – Using a higher price to enter the
market.
● Competitive pricing – Some firms set their price at
the same levels as their competitors.
Pricing strategies for Existing Products
For firms already competing in the market, pricing
strategies may include:
, ● Price leadership – This occurs when a firm dominates
the market, and other competitors follow its lead.
● Predatory pricing happens when a firm sets out to
destroy (or weaken) the competition through low
prices.
Pricing Methods
Pricing methods are ways in which businesses decide on
the price they charge for a product. Common methods
include:
● Cost-plus pricing – This pricing method considers
the total cost per unit. It then adds on a percentage
to get the final price.
● Contribution pricing – The contribution of a product
is the difference between the selling price and the
variable cost per unit.
● Price discrimination – This happens when different
prices are charged for the same good or service.
Pricing Tactics
Pricing tactics are short-term policies aimed at achieving
a particular objective. These include:
● Loss leaders – A loss leader is a product sold at a
loss to generate business for other products sold by
the firm.
● Psychological pricing occurs when products are sold
at prices intended to make customers think they are
a bargain.
