Promotional Pricing

10 Key excerpts on "Promotional Pricing"

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  Marketing Management N5 SB

  TVET FIRST

  • J Wiehan I Govender(Author)
  • 2018(Publication Date)
  • Macmillan

    (Publisher)

  The guest pays a deposit to secure the booking. • Travel agencies often offer advance-purchase discounts for tour bookings. Promotional discounts Promotional discounts or pricing is when a business reduces the list price of a product or service to promote sales for a certain period. For example, clothing stores often have promotional discounts on marked-down items, which encourages customers to buy full-price items as well. Businesses usually use Promotional Pricing during holidays or special days such as Christmas, Father’s Day, Mother’s Day and Valentine’s Day. On these occasions, manufacturers provide promotional items to retailers such as discount coupons, free samples or competitions to encourage customers to buy their promotional products. Figure 3.38: Businesses use Promotional Pricing on special days such as Valentine’s Day 175 Example 3.15: McCain Foods’ Promotional Pricing and distribution strategy McCain Foods is a Canadian multinational company. It is one of the world’s largest producers of French fries and other oven-ready frozen food products. McCain Foods uses a range of pricing strategies associated with adding value for money. For example, it sells ‘extra-fill’ packs that give the customer an extra 30% of the product for free. This rewards the consumer with some extras for their regular purchases and brand loyalty to certain products. McCain also offers special promotional prices or discount coupons on its products. McCain products are designed to look and taste good; they are produced from good-quality crops in a way that addresses consumers’ concerns about issues such as health and the origins of their food. This helps to ensure that McCain remains a trusted brand. As a business-to-business (B2B) organisation, McCain Foods does not sell directly to consumers. It distributes its products through wholesalers and retailers, such as major supermarket chains.

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  Contemporary Business

  • Louis E. Boone, David L. Kurtz, Michael H. Khan, Brahm Canzer, Rosalie Harms, Peter Moreira(Authors)
  • 2023(Publication Date)
  • Wiley

    (Publisher)

  Businesses that use discount pricing hope to attract customers by dropping prices for a set period of time. Automakers usually offer consumers special discounts on most or all of their vehicles during the holiday shopping season. After the holidays, prices usually rise again. Experts warn that discounting must be done carefully, or profits can disappear. Businesses should offer discounts only for a specified period of time and with a clear understanding of what they are trying to accomplish by using the strategy. They should advertise the discount, so cus- tomers know it is a special deal. When the time period is over, the discount should be over too. Competitive Pricing Many organizations rely heavily on price as a competitive tac- tic, but even more organizations use competitive pricing strategies. These firms try to reduce the emphasis on price competition by matching other firms’ prices and by focusing their own marketing efforts on the product, distribution, and promotional elements of the marketing mix. In industries with relatively similar products, competitors must match each other’s price reductions to maintain market share and remain competitive. By pricing their products to match the prices of competing offerings, marketers largely remove the price vari- able from their marketing strategies. Selling a product that is well understood by consumers and whose price must fall within a competitive range established by the market is a major challenge for businesses. This strategy is discussed in the “Business Model” feature. everyday low pricing (EDLP) a strategy of main- taining continuous low prices instead of using short-term price cuts such as cents-off coupons, rebates, and special sales. competitive pricing a strategy that tries to reduce the emphasis on price competition by matching other firms’ prices and by focusing marketing efforts on the product, distribution, and promotional elements of the marketing mix.

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  Contemporary Business

  • Louis E. Boone, David L. Kurtz, Brahm Canzer(Authors)
  • 2021(Publication Date)
  • Wiley

    (Publisher)

  With discount pricing, businesses hope to attract customers by dropping prices for a set period of time. Automakers usually offer consumers special discounts on most or all of their vehicles during the holiday shopping season. After the holidays, prices usually rebound. But experts warn that discounting must be done carefully, or profits can disap- pear. Businesses should offer discounts only for a specified period of time and with a clear understanding of what they are trying to accomplish with the strategy. They should adver- tise the discount, so customers know it is a special deal. When the time period has elapsed, so should the discount. Retailers have struggled with pricing as they continue to battle showrooming and price wars waged by online competitors. See the “Business & Technol- ogy” feature for more details. Competitive Pricing Although many organizations rely heavily on price as a compet- itive weapon, even more implement competitive pricing strategies. They try to reduce the skimming pricing strategy that sets an intentionally high price relative to the prices of competing products. penetration pricing strategy that sets a low price as a major marketing weapon. everyday low pricing (EDLP) is a strategy devoted to maintaining continuous low prices rather than relying on short-term price- cutting tactics such as cents-off coupons, rebates, and special sales. competitive pricing strategy that tries to reduce the emphasis on price competition by matching other companies’ prices and concentrating their own marketing efforts on the product, distribution, and promotional elements of the marketing mix. 7 Consumer Perceptions of Prices 397 emphasis on price competition by matching the prices of other companies and concentrating their own marketing efforts on the product, distribution, and promotional elements of the marketing mix.

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  Marketing

  • William Pride, O. C. Ferrell(Authors)
  • 2019(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  Bundle pricing is packaging together two or more complementary products and selling them at a single price. With multiple-unit pricing, two or more identical products are packaged together and sold at a single price. To reduce or eliminate use of frequent short-term price reductions, some organizations employ everyday low pricing (EDLP), setting a low price for products on a consistent basis. When employ- ing odd-even pricing, marketers try to influence buyers’ perceptions of the price or the product by ending the price with certain numbers. Customary pricing is based on tradi- tional prices. With prestige pricing, prices are set at an artifi- cially high level to convey prestige or a quality image. Professional pricing is used by people who have great skill or experience in a particular field, therefore allowing them to set the price. This concept carries the idea that professionals have an ethical responsibility not to overcharge customers. As an ingredient in the marketing mix, price is often coor- dinated with promotion. The two variables are sometimes so closely interrelated that the pricing policy is promotion- oriented. Promotional Pricing includes price leaders, special- event pricing, and comparison discounting. Price leaders are products priced below the usual markup, near cost, or below cost. Special-event pricing involves advertised sales or price cutting linked to a holiday, a season, or an event. Marketers that use a comparison discounting strategy price a product at a specific level and compare it with a higher price. 20-6 Describe the selection of a specific price. A pricing strategy will yield a certain price or range of prices. Pricing strategies should help in setting a final price. If they are to do so, marketers must establish pricing objectives, have considerable knowledge about target market customers, and determine demand, price elasticity, costs, and competitive fac- tors.

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  Principles of Marketing

  A Value-Based Approach

  • Ayantunji Gbadamosi, Ian Bathgate, Sonny Nwankwo(Authors)
  • 2013(Publication Date)
  • Bloomsbury Academic

    (Publisher)

  At Christmas everything goes up but in the January sales it is all sold at half price! Product-bundle pricing: Sellers combine several products at the same price. This is often used to move old stock such as books and CDs. Product line pricing: For example, a consumer buys an individual packet of crisps for 50p, a pack of four for 99p and a family pack of 20 for £2. Product line strategy: Marketing-oriented companies need to take account of where the price of a new product fits into its existing product line. Where multiple segments appear attractive, modified versions of the product should be designed and priced differently, not according to differences in costs, but in line with the respective values that each target market places on a product. Profit: The surplus amount of money generated by sales once fixed and variable costs have been removed. ohohe 229 7 Promotional Pricing: For example, buy one get one free (BOGOF) or buy two get the third free. Psychological pricing: Consumers buy for emotional reasons rather than rational ones – for example, in the case of a product priced at 99p instead of £1 we can say ‘I got this for under a pound’. Revenue: The amount of money generated by sales. Value pricing: Used to promote pricing during diffi cult economic conditions, for example, McDonald’s and M&S offer value meals from their food stores. Variable costs: Costs incurred in relation to selling or producing the product (e.g. raw materials, transportation, commissions, part-time staff ).

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  Wiley Pathways Small Business Management

  • Richard M. Hodgetts, Donald F. Kuratko, Margaret Burlingame, Don Gulbrandsen(Authors)
  • 2015(Publication Date)
  • Wiley

    (Publisher)

  Discount A reduction in the list price of a product or service. Geographic pricing A pricing strategy whereby a company charges customers based on where they live. Leader pricing The marking down of a popular product in order to attract more customers. Market A group of consumers who behave in a similar way. Marketing The process of promoting and selling products or services. Market niche A focused, targetable segment of the market; for a small business, a group of potential customers. Marketing research A systematic study of the factors that affect a business’s sales for the purpose of increasing profit. Monopolistic competition A market with many firms, each producing a small share of the output demanded. Monopoly A market with only one seller or producer and no substitutes for its products or services. 304 UNDERSTANDING MARKETS AND PRICING Odd pricing A pricing strategy of setting a price just below a round number, such as 99 cents rather than $1. Oligopoly A market where a few dominant firms account for most of the industry sales. Penetration pricing A strategy of using a low price that is competi- tive and designed both to stimulate demand and to discourage competition. Price lining The process of offering merchandise in several different price ranges. Primary research The collection of information previously unavailable. Pure competition A market with many independent sellers, each offering standardized products in the same basic way; the products are virtually identical, and buyers are indifferent as to which they purchase. Relevant price range The price that is neither above what current customers will pay nor below these levels; also, the price range that is not below the level where the business owner can sell at a profit. Return on investment control The process of reviewing product lines’ rev- enues and costs and keeping only those lines that deliver a reasonable return on investment.

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  Contemporary Business

  • Louis E. Boone, David L. Kurtz, Michael H. Khan, Brahm Canzer(Authors)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  Businesses that use discount pricing hope to attract customers by dropping prices for a set period of time. Automakers usually offer consumers special discounts on most or all of their vehicles during the holiday shopping season. After the holidays, prices usually rise again. Experts warn that discounting must be done carefully, or profits can disappear. Businesses should offer discounts only for a specified period of time and with a clear understanding of what they are trying to accomplish by using the strategy. They should advertise the discount, so customers know it is a special deal. When the time period is over, the discount should be over too. Selling a product that is well understood by consumers and whose price must fall within a competitive range established by the market is a major challenge for businesses. This strategy is discussed in the “Hit & Miss” feature. skimming pricing a strategy that sets an intentionally high price relative to the prices of competing products. penetration pricing a strategy that sets a low price as a major marketing tactic. everyday low pricing (EDLP) a strategy of maintaining continuous low prices instead of using short‐term price‐cutting tactics such as cents‐off coupons, rebates, and special sales. 377 Chapter 13 Promotion and Pricing Strategies © Randy Duchaine/Alamy Stock Photo Stores such as Walmart use an everyday low pricing strategy of maintaining continuous low prices instead of using short‐term price‐cutting tactics such as cents‐off coupons, rebates, and special sales. A Bis Gourmet—Quality Fast Food At Competitive Prices A bis, the Latin term for “encore or to repeat a pleasurable experience,” suggests the company philosophy that customers will come back for more after tasting the differ- ence quality can make to something as simple as a sandwich. A Bis Gourmet hand produce and deliver over 20,000 fresh sandwich products, parfait cups, fresh leaf and pasta salads each and every day.

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  Marketing Strategy

  • O. C. Ferrell, Michael Hartline, O. C. Ferrell, Michael Hartline, Bryan Hochstein(Authors)
  • 2021(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  Chapter 6: The Marketing Program 153 both simultaneously. Second, pricing is the easiest of all marketing variables to change. Although changing the product and its distribution or promotion can take months or even years, changes in pricing can be executed immediately in real time. Real-time price changes are the norm in many industries, including air travel, hotels, and e-commerce. Prices for the same product vary around the world to account for differences in currencies, taxes/tariffs, and consumer demand. Third, firms take considerable pains to discover and anticipate the pricing strategies and tac- tics of other firms. Salespeople learn to read a competitor’s price sheet upside down at a buyer’s desk. Retailers send “secret shoppers” into competitors’ stores to learn what they charge for the same merchandise. Even buyers spend considerable time comparison shopping to find the best deal. Competitor webpages and offers are scraped by AI bots to quickly and consistently moni- tor price changes and/or new offers. Finally, pricing receives a great deal of attention because it is considered to be one of the few ways to differentiate a product in commoditized and mature markets. When customers see all competing products as offering the same features and benefits, their buying decisions are primarily driven by price. 6.3a Key Issues in Pricing Strategy Given the importance of pricing in marketing strategy, pricing decisions are among the most complex decisions to be made in developing a marketing plan. Decisions regarding price require a tightly integrated balance among a number of important issues. Many of these issues possess some degree of uncertainty regarding the reactions to pricing among customers, competitors, and supply chain partners. Clearance Pricing Is Unclear 11 Discounting, which involves price reductions to stimulate sales, are attractive to consumers because they feel that they are getting a good deal in paying less for an item than its initial price.

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  Essentials of Contemporary Business

  • Louis E. Boone, David L. Kurtz(Authors)
  • 2013(Publication Date)
  • Wiley

    (Publisher)

  Prestige pricing establishes a high price to develop and maintain an image of quality or exclusiveness. Although economic theory determines prices by the law of demand and supply, most firms use cost-based pricing, which adds a markup after costs. By conducting a breakeven analysis, marketers can determine the minimum sales volume a product must generate at a certain price to cover costs. The four alternative pricing strategies are skimming, pen- etration, everyday low pricing and discounting, and competitive pricing. volume objective pricing strategy that bases a pricing decision on the attainment of market share. prestige pricing strategy that establishes relatively high prices to develop and maintain an image of quality and exclusiveness. everyday low pricing (EDLP) strategy devoted to maintaining continuous low prices rather than relying on short-term price- cutting tactics such as cents-off coupons, rebates, and special sales. skimming pricing strategy that sets an intentionally high price relative to the prices of competing products. penetration pricing strategy that sets a low price as a way to enter competitive markets. cost-based pricing strategy in which an organization calcu- lates total costs per unit and then adds markups to cover over- head costs and generate profits. breakeven analysis pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. products offer an extra incentive to buy a product. Point-of-purchase advertising displays and trade shows are sales promotions directed to the trade markets. Personal selling involves face-to-face interactions between seller and buyer. The primary sales tasks are order process- ing, creative selling, and missionary selling. Public relations is non- paid promotion that seeks to enhance a companys public image. sales promotion activities that support advertising and per- sonal selling.

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  Problems in Marketing

  Applying Key Concepts and Techniques

  • Luiz Moutinho, Charles S Chien(Authors)
  • 2007(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  In fact, price has been experiencing considerable downward pressure in recent years. As consumers’ real incomes stagnate or decline and they experience diminishing expectations, they shop more carefully, forcing retailers to lower their prices. Retailers in turn put pressure on manufacturers to lower their prices. The result is a marketplace characterised by heavy discounting and sales promotion. Price is the only element in the marketing mix that produces revenue; the other elements produce costs. Price is also one of the most flexible elements of the marketing mix, in that it can be changed quickly, unlike product features and channel commitments. At the same time, pricing and price competition are the number-one problems facing many marketing executives.Yet many companies do not handle pricing well. The most common mistakes are these: pricing is too cost-orientated; price is not revised often enough to capitalise on market changes; price is set independent of the rest of the marketing mix rather than as an intrinsic element of market-positioning strategy; and the price is not varied enough for different product items, market segments and purchase occasions. Companies handle pricing in a variety of ways. In small companies, prices are often set by top management rather than by marketing or salespeople. In large companies, pricing is typically handled by division and product-line managers. Even here, top management sets the general pricing objectives and policies and often approves the piece proposed by lower levels of management. A firm must set a price for the first time when the firm develops or acquires a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it enters bids on new contract work. The firm must decide where to position its product on quality and price.

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