Top 10 Concepts

Pricing...

1. is an integral part of the marketing mix (why?) as it produces revenue, communicates product positioning, and affects consumer choices.

2. is influenced by consumers (how>) as they buy based on reference prices, price-quality inferences and price endings.

3. is easier done with a clear objective in mind (what?) - survival, maximum current profit, maximum market share, maximum market skimming, product-quality leadership.

4. must always respond the the times (how?) by always monitoring your customers' wants, competitors' responses and the environment.

5. tactics must be made with competitors in mind (how?). use their prices as your starting point, and make sure to anticipate their response to your price change.

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6. employs different methods (what?) like mark-up pricing, target-return pricing, perceived-value pricing, value pricing, going-rate pricing and auctions.

7. is not always about lowest price (why?) as most consumers are willing to pay extra for added features and/or services.

8. differentiation allows you to respond to differing consumer needs (how?) by being able to offer a unique bundle of products to meed their needs precisely.

9. can be boosted by advertising (how?) because higher advertising means higher brand/product visibility and recognition.

10. increases must be done carefully to avoid alienating customers (how?). Research indicates that customers prefer frequent small price increase, and want to have advance notice. Alternative low-visibility price increases such as smaller portions (but with the same price) may also be used.

MM Kui (December 2009)