Marketing_L7
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Break-Even Chart for Determining Target-Return Price and Break-Even Volume
CompeIIon-Based Pricing
SeTng prices based on compe&tors’ strategies, prices, costs, and market o erings.
Independent bookstore Annie Bloom’s Books isn’t likely to win a price war against Amazon.com or Barnes & Noble. Instead, it relies on outstanding customer service and a cozy atmosphere to turn booklovers into loyal customers.
Other Internal and External
ConsideraDons A ecDng Price
Decisions
• Internal factors a ec&ng pricing include the company’s overall marke&ng strategy, objec&ves, and marke&ng mix, as well as other organiza&onal considera&ons.
• External factors include the nature of the market and demand and other environmental factors.
Internal factors
• Marke&ng Strategy
Company ObjecIves
• aMract new customers or profitably retain exis&ng ones
• prevent compe&&on from entering the market
• stabilize the market
• keep the loyalty and support of resellers
• avoid government interven&on
• create excitement for a brand
• one product may be priced to help the sales of other products in the company’s line.
OrganizaIonal ConsideraIons
Management must decide who within the organiza&on should set prices. Companies handle pricing in a variety of ways.
• In small companies, prices are oben set by top management rather than by the marke&ng or sales departments.
• In large companies, pricing is typically handled by divisional or product line managers.
• In industrial markets, salespeople may be allowed to nego&ate with customers within certain price ranges.
External factors
The Market and Demand
Analyzing the Price-Demand
RelaIonship
Demand curve- A curve that shows the number of units the market will buy in a given &me period, at di erent prices that might be charged.
When ConAgra raised prices on its Banquet frozen dinners, sales fell sharply. “The key component . . . is you’ve got to be at $1,” says CEO Gary Rodkin, pictured above. “Everything else pales in comparison to that.”
Price ElasIcity of Demand