{"id":301,"date":"2022-09-20T15:45:08","date_gmt":"2022-09-20T14:45:08","guid":{"rendered":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/?page_id=301"},"modified":"2022-09-20T15:45:08","modified_gmt":"2022-09-20T14:45:08","slug":"price","status":"publish","type":"page","link":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/price\/","title":{"rendered":"Price"},"content":{"rendered":"<h2><span style=\"color: #ff0000\"><strong>Marketing Mix &#8211; Price<\/strong><\/span><\/h2>\n<p>The <strong>price<\/strong> is the amount that consumers must pay for a product.\u00a0 Lower prices usually lead to higher sales volumes and vice versa.<\/p>\n<p>Profit levels are not <em>entirely<\/em> linked to the number of sales however as a high profit mark-up on a lower sales volume can be more profitable than a low profit mark-up on a high sales volume.<\/p>\n<h3><span style=\"color: #ff0000\"><strong>Setting Price &#8211; Factors to Consider <\/strong><\/span><\/h3>\n<ul>\n<li>Prices being charged by competitors for similar products.<\/li>\n<li>How much it cost to make the product \u2013 so that costs are covered.<\/li>\n<li>The level of demand for the product \u2013 which may change over time.<\/li>\n<li>The desired profit margin eg third sector organisations may focus on covering costs over making profits.<\/li>\n<li>The stage of the product life cycle eg introduction, growth, maturity.<\/li>\n<\/ul>\n<h3><span style=\"color: #ff0000\"><strong>Cost-Plus Pricing<\/strong><\/span><\/h3>\n<p>The organisation calculates the average cost of producing a unit of the product, then adds on a percentage \u2018mark-up\u2019 to get the selling price.<\/p>\n<p>Example:\u00a0 Product A costs, on average, \u00a310 to produce.<\/p>\n<p>A producer who decides to mark up by 10% will sell for (\u00a310 + \u00a31) = \u00a311.<\/p>\n<hr \/>\n<h3><span style=\"color: #ff0000\"><strong>Competitive Pricing<\/strong><\/span><\/h3>\n<p><a href=\"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/public\/n5businessmanagement\/uploads\/sites\/10132\/2022\/09\/20154300\/Picture15.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-296\" src=\"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/public\/n5businessmanagement\/uploads\/sites\/10132\/2022\/09\/20154300\/Picture15.jpg\" alt=\"\" width=\"125\" height=\"124\" \/><\/a>Rival businesses may decide to charge the same prices for the same products \u2013 for example, petrol, CDs and videos.<\/p>\n<p>They do this to avoid a price war with their competitors.\u00a0 The business will aim to<span style=\"color: #ff0000\"> <strong>price match<\/strong><\/span> and then to compete on other elements of the marketing mix such as promotion.<\/p>\n<hr \/>\n<h3><span style=\"color: #ff0000\"><strong>Penetration Pricing (Low Pricing)<\/strong><\/span><\/h3>\n<p>When introducing a new product, price is set low price to break into (penetrate) the market \u2013 eg new chocolate bars or a new brand of coffee.<\/p>\n<p>This will aim to break customers\u2019 brand loyalty to rival products.\u00a0 Once the new product is established, prices will be increased and newly brand loyal customers should continue to purchase.<\/p>\n<hr \/>\n<h3><span style=\"color: #ff0000\"><strong>\u00a0<\/strong><strong>Promotional Pricing (Low Pricing)<\/strong><\/span><\/h3>\n<p><a href=\"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/public\/n5businessmanagement\/uploads\/sites\/10132\/2022\/09\/20154301\/Picture16.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-297 alignright\" src=\"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/public\/n5businessmanagement\/uploads\/sites\/10132\/2022\/09\/20154301\/Picture16.gif\" alt=\"\" width=\"138\" height=\"111\" \/><\/a>An established product reduces its prices for a short time to re-capture interest in the product and prevent it going into decline.<\/p>\n<p>They may also do this if they have too much stock that may be about to perish or go out of fashion.<\/p>\n<hr \/>\n<h3><span style=\"color: #ff0000\"><strong>Destroyer Pricing (Low Pricing)<\/strong><\/span><\/h3>\n<p>A large organisation may try to wipe out its competitors by reducing its prices to loss making levels.<\/p>\n<p>Reserves of profit are needed as the organisation has to \u2018out live\u2019 the competitors it is trying to destroy.<\/p>\n<p>Once competitors have been driven out of the market, prices can be increased again to a profit-making level.<\/p>\n<hr \/>\n<h3><span style=\"color: #ff0000\"><strong>Premium Pricing<\/strong><\/span><\/h3>\n<p><a href=\"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/public\/n5businessmanagement\/uploads\/sites\/10132\/2022\/09\/20154301\/Picture17.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-298\" src=\"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/public\/n5businessmanagement\/uploads\/sites\/10132\/2022\/09\/20154301\/Picture17.gif\" alt=\"\" width=\"118\" height=\"115\" \/><\/a>Prices are set and kept at a high level at all stages of the product life cycle.\u00a0 This will maintain an exclusive image for the product.<\/p>\n<p>This is associated with premium brands and must be linked to promotional activity to persuade customers that it is a superior quality product.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Marketing Mix &#8211; Price The price is the amount that consumers must pay for a product.\u00a0 Lower prices usually lead to higher sales volumes and vice versa. Profit levels are not entirely linked to the number of sales however as a high profit mark-up on a lower sales volume can be more profitable than a [&hellip;]<\/p>\n","protected":false},"author":79984,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-301","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/pages\/301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/users\/79984"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/comments?post=301"}],"version-history":[{"count":1,"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/pages\/301\/revisions"}],"predecessor-version":[{"id":302,"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/pages\/301\/revisions\/302"}],"wp:attachment":[{"href":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n5businessmanagement\/wp-json\/wp\/v2\/media?parent=301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}