1. PRICE SETTING
Prepared by:

2. PRICE SETTING
• Price setting is a very critical area in marketing
mix decisions of a company. It is the only
element that generates revenues for the
company, and all others involve only costs.
• Price represents the value that is exchanged in a
marketing transaction.

3. Price Competition:
price-based competition occurs when consumers cannot readily
differentiate between competitive offerings. In this situation
companies use price as a tool to differentiate its products from
competitors’ products to beat or match prices set by competitors.
Non-Price Competition:
Non-price competition focuses on other than price factors of a
product such as distinctive product
features, quality, service, packaging, and promotion to make it
meaningfully differentiated from competing brands.

4. Pricing Objectives
Pricing objectives focus on what a company wants to
achieve through establishing prices.
 Profit
 Return on Investment (ROI)
 Market Share
 Product Quality

5. Objectives Typical Actions
Survival Price adjustment to enable company to increase
sales volume to meet company expenses.
Profit Determine price and cost levels that permit
company to realise maximum profits.
Pricing
Objectives Return on Determine price levels that allow company to yield
Investment targeted Return on Investment.
and Typical
Company Market Adjust prices to maintain or increase sales volume
Share relative to competitors.
Actions
Product Company sets prices to recover R&D expenditures
Quality and high product quality. Establish high-quality
image.

6. Price Setting Procedure
The steps involved in price setting include:
(1) Development of Pricing Objectives
(2) Determination of Demand
(3) Estimation of Costs
(4) Examining Competitors’ Costs, Prices, and Offers
(5) Selecting a Pricing Strategy

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