Tues Oct 11

Record into your notes.....

Price is the amount that consumers will be willing to pay for a product. Marketers must link the price to the product's real and perceived value, while also considering: supply costs, seasonal discounts, competitors' prices, and retail markup.

Pricing is one of the four main elements of the marketing mix. Pricing is the only revenue-generating element in the marketing mix (the other three elements are cost based—that is, they add to a company’s cost). 

The business model is a conceptual representation of the company’s revenue streams. Any significant changes in the price will affect the viability of the business model.

A well-chosen price should accomplish these 3 goals:

   1. achieve the company’s financial goals (profitability) 

   2. fit within the realities of the marketplace ( ensure customers are willing and               able to pay the set price of the product or service)

• 3. support a product’s positioning and be consistent with the other variables in the marketing mix (product quality, distribution, promotion challenges)

• When considering your price, it’s important to realize you are not setting the price for yourself but for your target customers.

• Create a list of the following for a small retail clothing business in Courtenay
• ( like a 133 shop)
• Variable ( Costs that will change) and Fixed Costs (Costs that remain the same month to month)
• Value-based pricing: Set the price based on how the customer values the product. (See below for further details.)

Value-based pricing

Value-based pricing attempts to establish the return generated by the product’s use from the customer’s point of view. How a customer perceives product value, and the actual value the customer receives, can be estimated by identifying:

• the target customer (their budget, ability to purchase)—specifically, the value can be estimated 
• buyer motivation (willingness to buy, the risk involved)
• the product and its complexity (its ability to meet customer’s objectives)
• distribution (delivery, support)