Pricing Policy, Principles of Marketing Video Lecture | Principles of Marketing - B Com

alright ladies and gentlemen today we're
gonna take a look at why exactly
Macklemore bought a broken keyboard well
it probably has to do with some price
policies so mature get your notes you
follow the storm philosophy for
note-taking sit back and enjoy alright
so what are you gonna learn today well
we're gonna take a look at exactly what
we mean by price policies we're gonna
differentiate price policies from price
strategies and then we're gonna get into
all the different price policies from
leader pricing whoa Macklemore what do
you do a man yeah I don't know what how
to rock a wolf on my noggin but what I
do know is some price policies and I
guarantee you will too so price policies
are all about the businesses the
retailers the decisions they make in
terms of the price right price
strategies are what you as a
manufacturer you want to sell your
product for a lot or a little but price
policies it's exactly what you're trying
to sell the product for so it all
depends on a number of things yeah
Malcolm or I know you're at the goodwill
okay but it's all about the
manufacturers distributors price is all
about consumer demand it's all about
your market objectives if your market
objective is to sell it at the goodwill
well then your price policy will be set
accordingly so again just to
differentiate your price strategies are
those general range of prices that you
suggest the price policies are what the
actual store will set and this can be a
number of different price policies right
it's maybe it's limited edition right
and then you're gonna do some simple
addition and figure out that you want to
do some leader pricing it all depends so
as a retailer you got one of each choice
is leader pricing price lining everyday
low prices supersize negotiate pricing
interest free pricing combo pricing or
psychological pricing and if your target
maybe you're gonna choose one of these
price policies so first up is leader
pricing right this is offering the best
price on brand-name merchandise so if
you offer those popular products like
velcro's at lower prices then everyone
will come to your store to get those
products
and what they will end up doing is buy
those products and other products that
you might have marked up so customers
think that because again the best price
on the popular item that they're getting
the best price on all of those other
items not realizing that they are
slightly higher than other retailers so
again the purpose generate store traffic
and encouraging customers to purchase
other items therefore increasing your
profit margin so next up is price lining
this is the idea that you're putting all
your products at one price in one place
this is the very concept of a dollar
store
everything's $0.99 right so the purpose
to sell these items that have different
markups though some things and the
dollars too are only cost really 10
cents but they're marked up to 99 cents
other items are over $1 and they're sold
at $1 so on average you're making profit
and that's the idea you're selling items
that have different markups different
profit margins in the same spot so
customers are gonna buy a wide variety
of them so this is the idea that every
price in the store is low
it's guaranteeing low prices to the
customer this is everyday low pricing
think target expect more pay less or
Walmart save money live better right
those are offering low prices customers
are tired of looking around for sales at
other stores so they know they can go to
Walmart Target these other big-box
retailers and get the lower price all
the time it saves the store in terms of
the advertising cost because they they
don't have to advertise customers know
where to go they're saving money and I'm
happy that's a bargain
all right Macklemore so this is the idea
everyday low prices and enhances that
reputation for the retailer now I'm sure
many of you have done this before
supersize and yes this is getting
tricked by a business this is when you
walk into a Burger King McDonald's or
many other fast-food restaurants and you
say yeah I'll have it super-sized so
this is providing customers with the
opportunity to pay for and receive a
larger portion of the item and the trick
here how are you getting tricked by a
business yeah this is when the cost of
increasing that size for the business is
so small yet you're paying much much
greater prices as a result and therefore
the business is receiving all of that in
turn
of profit this is a great way to
increase profit margins whose by and
whose cell negotiated pricing yeah one
man's junk that's another man's bargain
right so the buyer is making the offer
to purchase an item and a seller is
making offer to sell the item oftentimes
less than the published price or what
you can get anywhere else for example
you walk into a car dealership you're
always always trying to negotiate with
them the dealership is always always
trying to sell it for a much greater
price then you're probably willing to
pay but through negotiations then you
bring the price down to a lower price
that you're comfortable with this is one
of those ways that you can almost
guarantee a sale if you're willing to
come down to a certain price and the
seller buyer stories come willing to
come up and you're gonna negotiate a
sale and that's why you're gonna go
through this hassle of negotiated
pricing
ho-ho-hold the payments don't pay for
one whole year yeah the idea you only
got twenty dollars in your pocket how
are you gonna buy that huge TV well this
is where interest free pricing comes in
all right so this as a retailer you can
offer your consumers a chance to
purchase the product with low or no
interest for a period of time oftentimes
it's one year and as soon as the year is
up then you're gonna get nailed with the
interest and the interest rates are
gonna be much much higher than normal
now this is a way that a retailer can
guarantee that they're gonna receive
their money consumers sign a contract to
pay and if they don't then a collection
agency will come after them for the
money now the store is out of this
equation because they've already sold
that contract to the collection agency
for a discounted price they're
guaranteeing they get the money through
this collection agency they don't have
to worry about dealing with the customer
later the collection agency will do that
for them so it's a way of guaranteeing
your money
I'll take combo number three jumpsuit
and some house slippers please yeah
that's an awesome combo so this is when
you're offering customers a deal on a
certain item but they must purchase
another item in order to get that deal
often times they're for that other item
is marked up and your profit margins
increase as a result it generates
greater profits and your
selling items that you might not be able
to sell on your own for example
purchasing hamburger for 99 cents when
you buy a large size drink and fries at
regular price 2 products that are often
hugely marked up at fast-food
restaurants last up some psychological
pricing getting into your head yeah this
is when businesses are using your
consumer behavior to forecast acceptable
prices to think about this for a second
how many times have you gone home and
when your parents have asked you how
much something costs you say nine
dollars when in fact it cost $9.99
that's like ten dollars that's a cent
off but why do you say nine dollars
because of your brain your brain saying
$9.99 well that's like nine dollars not
ten dollars and retailers know this so
that's why they always use nine nine
cents not full numbers sometimes
businesses will use those full numbers
of 10-15-20 because they're going to try
and indicate that that's greater quality
product so again using that psychology
on you and trying to convince you that
you're getting a either great quality
product or a deal on the product all
right so that brings us to the end of
our little video here on price policy so
I want you consider what kind of price
policy are you going to use in your
marketing plan all right think about how
they what Macklemore no that's not my
grandma's coke god
all right so hope you enjoyed it we'll
see you tomorrow