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

when determining the price of a product
or a service we talked about using
pricing strategy however before we start
talking about pricing strategy let us
just list the learning goals for this
video firstly the goal is to establish a
general understanding of the actual
purpose of pricing strategy in other
words what is pricing strategy and why
do we need to know about it secondly
this video aims to provide you with an
overview of the different available
tools and theories that we as marketers
can use when defining a price of a
product or service in other words how
could we go about using pricing strategy
so what is the purpose of pricing
strategy
and what is the connection to the rest
of the marketing mix when you are asked
to design the marketing mix you need to
make decisions on four or seven core
elements also known as the four of the
7ps first of all any issues concerning
the product
this would include packaging and all
other elements in connection with the
products secondly a decision on price
which is what this video will address
thirdly you will need to decide on the
choice of place through which channels
will you distribute the product or
service we will also need to make a plan
of which promotional activities we will
carry out in order to tell our customers
about our product and encourage them to
buy if we're dealing with an offering
that is better described as a service or
perhaps a product that includes large
elements of service we might also want
to look at the additional three piece
the people that are involved in
delivering the service the process that
our customers will go through in order
to receive our service and the physical
evidence any visible or tangible
elements that the customer will see here
point other ways experienced when
receiving the service none of the four
or the seven P's should be decided on in
isolation
however price is the P which we will
focus on in this video so what is the
purpose of pricing strategy and why is
it important to make sure we charge the
right price let us imagine that we are
opening up a new cafe in town it's a
French cafe serving beautiful decorative
and delicious cakes and specialties
we named the cafe the French cafe
leaving no one unsure of the type of
cafe this is we have appointed an
educated and experienced confectioner
and he really wants to impress our
guests with his high quality cakes and
desserts but he is a confectioner not a
marketing person and he's unsure of how
to price his cakes and desserts so let's
help him out there are many reasons why
charging the right price matters to the
success of our French cafe firstly we
need to ensure that the price makes
sense to our chosen target group that
they perceived price to correspond by
the way we have positioned the cafe in
their minds if we look in the window we
can see that this cafe serves high
quality delicious French cakes and that
it has a deck wall that fits therefore
it would send a wrong signal if we were
to charge a very low prices like
offering an all-you-can-eat buffet for
one euro so charging a price that
doesn't correspond with the way we have
positioned the cafe would leave our
customers confused drawing a link back
to the other elements of the marketing
mix we can say that we need to make sure
that our price is in line with all other
elements of the marketing mix
secondly we need to consider some
financial circumstances about our chosen
target group and we need to consider how
they are likely to value our goods and
services we need to charge a price which
our chosen target group is both willing
and able to pay thirdly when looking at
our overall strategies and objectives
with this product or service in this
case our cafe we also need to make sure
that the price we chose supports our
goals that we have set out to achieve
with this cafe and finally we need to
ensure that we generate adequate income
to cover our costs and preferably make a
healthy profit either in the short term
or in the long term depending of course
on our strategy
we have now established the purpose of
pricing strategy what it is and why we
need it we have established that there
are many factors which we need to look
at before we can decide on the best
price for our product or service so
let's move on as marketers we have some
different tools and theories we can use
to guide us when determining the price
these will not be described in detail in
this video but let us just introduce an
overview of some of the tools we could
use when determining the price price
elasticity can be looked at to what
extent if at all will a price change
impact the demand for our product or
service secondly cost oriented pricing
can be used this is where we base our
price on the different costs involved in
producing and selling our products we
can also use a competitor oriented
pricing this is where we base our price
on the knowledge we have about our
competitors prices and activities
another option is the marketing oriented
pricing which involves looking in depth
at how our customers value our product
or service skimming or penetration
strategies is a look at the strategy
behind the combination of two things
namely a high or low price level and the
promotional activity level we can also
consider our strategic objectives
whether we want to build fold harvest or
perhaps reposition a product has an
impact on the price level we will choose
finally we can also look at some general
market characteristics some different
conditions and pros and cons of charging
a high or no price
we have now established an understanding
of the purpose of pricing strategy and
lastly we have presented an overview of
the different tools and there is
available to us when determining a
suitable price for our product or
service to learn more about pricing
strategy and how to use the different
tools and theories introduced in this
video I recommend that you read chapter
13 in David Jabba and Fiona Ennis
Chadwicks principle and practice of
marketing management 7th edition my name
is Tina Wade thank you for watching
you