Pricing Strategies

Pricing Strategies For Marketing 2009 Pricing Strategies for Marketing Table of Contents Executive Summary ........................................................................................................................ 3 Learn How to Improve Performance .............................................................................................. 4 The Breakeven Analysis .............................................................................................................. 5 What Pricing Should Do ................................................................................................................. 6 Pricing Strategies ............................................................................................................................ 7 Questions Associated with Pricing ............................................................................................... 10 The 9 Laws of Pricing Sensitivity................................................................................................. 13 Pricing Definitions ........................................................................................................................ 15 Common Pricing Mistakes ........................................................................................................ 18 Pricing Tactics ........................................................................................................................... 18 Pricing Strategies for Marketing Executive Summary P ricing is one of the most important ingredients of the marketing blend. It is the only ingredient that produces a turnover for the company. Many companies do not view their pricing strategies as a part of their overall marketing strategy. Because pricing strategies have a profound impact on a company‟s overall profit margin, they should be given the same consideration as the promotion and advertising strategies. A price that is higher or lower can dramatically alter gross margins and sales volumes, which indirectly affects other expenses like reducing storage costs, or establishing opportunities for volume discounts with suppliers. The four “P‟s” of marketing are: 1. Pricing 3. Promotion 2. Product 4. Place Setting prices is very hard. There are costs associated with producing, designing and promoting a product line. The product‟s pricing has to incorporate the expenditures for all of those components into its overall price. It needs to support the relationship between supply and demand. If a product is priced too high or too low, it could