TAILIEUCHUNG - Lecture Basic Marketing: A global managerial approach - Chapter 17: Pricing objectives and policies

In this chapter you will: Understand how pricing objectives should guide strategic planning for pricing decisions; understand choices the marketing manager must make about price flexibility and price levels over the product life cycle; understand the many possible variations of a price structure, including discounts, allowances, and who pays transportation costs;. | Chapter 17: Pricing Objectives and Policies Strategic Planning for Price Pricing objectives Target Market Price Promotion Place Product Geographic terms— who pays transportation and how Discounts and allowances— to whom and when Price levels over product life cycle Price flexibility 17-2 Exhibit 17-1 Summary Overview Price is one of the four major variables a marketing manager controls. Price-level decisions are especially important because they affect both the number of sales a firm makes and how much money it earns. The Price Equation Price is the amount of money that is charged for “something” of value. Almost every business transaction in our modern economy involves an exchange of money--the Price--for something. Pricing Objectives and Policies Marketing managers must develop specific objectives and policies for Price-level decisions in each of the following areas. Flexibility. Policies should explain how flexible the company will be toward altering the price. Level over the Product Life Cycle. Strategies for dealing with price issues across the product life cycle must be developed. Use of Discounts and Allowances. Where, when, and to whom discounts and allowances are to be offered must be decided. Paying for Transportation. Transportation costs can have a big impact on price and provide the marketing manager with several choices for managing the overall price offer. Pricing Objectives 17-3 Dollar or Unit Sales Growth Growth in Market Share Target Return Maximize Profits Meeting Competition Nonprice Competition Pricing Objectives Sales Oriented Profit Oriented Status Quo Oriented Exhibit 17-4 Summary Overview Company-level and marketing objectives provide the guidance for setting pricing objectives. Pricing objectives should be explicitly stated because of their effect on the pricing policies adopted by the company. As illustrated on the slide, three types of pricing policies can be identified. Pricing policies also affect other aspects of the marketing mix as

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