Marketing Chapter 5: Price Mix

Chapter 5: Price Mix

• Price is the value attached to a service by the provider, reflecting the customer's perceived value.
• Price can be expressed in terms of money, and other ways like interest fees, rent, or salary.
• Price can also reflect the relationship between provider and customer.
• Price includes the tangible product, services, and additional attributes such as delivery, installation, credit, and after-sale services and privileges.
• Price is a crucial marketing element; it generates revenue for the organization.
• The amount of money charged for a service or product.

Most Common Pricing Objectives

• Profit-Oriented Objectives:
  • Target Return Objectives: A specific profit level is set as an objective.
  • Profit Maximization: Aims to maximize profit.
• Sales-Oriented Objectives: Focus on achieving higher sales volume.
• Status Quo Objectives: Maintain the current price levels of similar products or services in the market.

Hospitality Pricing Objectives

• Factors such as intangibility, perishability, and heterogeneity are crucial to hospitality pricing.
• Hospitality pricing has specific objectives (outlined by Lazer and Layton).

Chapter 6: Promotion Mix

• Promotion includes all marketing communications.
• Advertising: Paid, non-personal presentation and promotion of goods/services by an identified sponsor.
• Types of Advertising: Brand advertising, promotional advertising, advocacy advertising, classified advertising, comparative advertising, institutional advertising.
• Advertising Objectives: New product introduction, detailing product functions, highlighting uses or correcting usage, new distributions, and price adjustments.
• Personal Selling: Informing and persuading through person-to-person contact.
• Types of personal selling include across-the-counter, door-to-door, dealer, and manufacturer.
• Sales Promotion: Activities that complement personal selling and advertising to enhance effectiveness.
  • Examples include prizes, contests, sweepstakes, and cross-promotional activities.
• Public Relations: Actively seeking to manage publicity.
  • Examples include press conferences, community involvement, and exclusive interviews.
• Direct Marketing: Selling products directly to the public.
  • Examples include online marketing, email marketing, and text-to-text marketing.

Pricing Methods and Strategies

• Market Skimming: Initially setting high prices and then gradually reducing them over time.
• Market Penetration: Starting with a low price and increasing it as demand increases.
• Prestige Pricing: Setting high prices for luxury products to appeal to specific customers.
• Price Lining: Setting different prices for products in a specific group.
• Odd-Even Pricing: Pricing products slightly below whole numbers (e.g., $99 instead of $100).
• Bundle Pricing: Combining several products and offering them at a reduced price.
• Bait Pricing: Advertising a low-priced product to attract customers and then upselling them.
• Price Leadership: Setting prices based on the price set by a leading competitor.
• Captive Product Pricing: Setting a lower price for a main product with higher prices for complementary products.
• Price Discrimination: Setting different prices for different customer groups.
• Competition Pricing: Setting prices based on competitors' prices.
• Optional Product Pricing: Increasing the amount customers spend for optional extras.
• Premium Pricing: High prices to reflect the exclusive nature of a product.
• Economy pricing: Low-cost offering with minimal frills.
• Geographical pricing: Varying prices based on location.
• Value pricing: Focusing on providing "value" products/services.
• Stay-out pricing: Setting prices low to dissuade new competitors.

Factors Influencing Pricing Decisions

• Internal factors: Organizational policies, service differentiation, service cost, and marketing mix (the factors within a company that can affect pricing).
• External factors: Demanded of users, different points of consumption or production, competition, governmental regulations.

Factors Affecting Customer Willingness to Pay at a Restaurant

• Uniqueness of the menu
• Food and service quality
• Chef's reputation
• Restaurant ambience.
• Additional factors like ongoing promotions, holiday promotions, special event pricing, package promotions, and competitive pricing.

Explore the intricacies of price as a vital component of marketing in Chapter 5. This quiz delves into pricing strategies, objectives, and the relationship between providers and customers. Understand how pricing impacts revenue and market positioning.