1. PRICING STRATEGIES

5. DETERMINANTS OF PRICING DECISION INTERNAL FACTORS EXTERNAL FACTORS OTHER OBJECTIVES

8. Methods/Approaches to pricing APPROACHES- THREE TYPES COST BASED METHOD BUYER BASED METHOD COMPETITION BASED METHOD

10. BUYER BASED PRICING Certain Companies base their pricing on the product’s perceived value. They see the buyer’s perception of value, not the seller’s cost, as the key to pricing. Here, seller use non-price variables in the marketing mix to build up perceived value in the buyer’s minds. For example a cup of coffee in a self service restaurant is charged at Rs.5/-, in a restaurant with service at Rs.8/-, in a family restaurant at Rs.12/-, in a posh area a/c room at Rs.15 and in 3 star hotel at Rs.20 and in 5 star hotel may be Rs.25/-. So each successive restaurant can charge more because of the value added by the atmosphere.

14. Pricing Strategy #1 Price A Product Or Service To Penetrate The Market Example: The way marketing guru Dr. Ken Evoy, who introduced his first product "Make Your Site Sell" to the Internet in 1999, is a good example of how to penetrate the market. Dr. Evoy developed a huge affiliate network of thousands of marketers by introducing this extremely low-priced informational product about Internet marketing. Today, his company enjoys the benefit of repeat business because he was able to effectively penetrate the market with this strategy.

15. Pricing Strategy #2 "Skimming the Cream!" "Skimming the cream" is the opposite of penetration. This is a high priced model, sometimes called "top pricing." The idea behind this philosophy is to give you high profits, even at the cost of losing a large number of potential customers. Typically, when a company launches a new product, they charge higher prices in the beginning to help recoup R&D expenditures quickly. Pricing

16. Pricing Strategy #3 "The Loss Leader!" Want to kill your competition? The loss leader is the way to set your prices to get the job done. No matter the cost! Even at a loss in profits! In its truest form, this approach has one objective -- ELIMINATE THE COMPETITION! The consequences of even a slight misjudgment in using this retail pricing strategy could be devastating to your business.

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