ENTREP PRACTICE

Consumers pay a price in exchange for products they buy.

- sum of all values customers give up to gain benefits of having/using product (Kotler & Armsrtong 2014)

- only element in in marketing mix that generates revenue, all other elements incur costs.

• PRICE

• MONEY

• PRODUCT COST

• COMPETITORS

· most common payment of price exchange for a product.

^NOTES:

 > companies to set right prices of products to earn fair profits.

> sometimes price can make/break company

> if product is priced lower than cost, company will lose money

> if priced too high without offering good value, consumers will not patronize it.

> if price is right & able to give good value to justify its price, customers will continue buying product & company may even grow its market share over time.

• PRICE

• MONEY

• PRODUCT COST

• COMPETITORS

cost involved in manufacturing goods/offering services have direct impact on products price. Cost may include product development, research, testing, packaging, raw materials, promotion, distribution.

• ECONOMIC CONDITIONS

• OVERALL MARKETING STRATEGY

• PRODUCT COST

• COMPETITORS

• GOVERNMENT LAWS & REGULATIONS

 consumers base their purchase decisions solely on price of product. If competitor offers same product with same benefits at lower price, consumer will patronize competitor’s product. Often leads to price war or market situation companies cut down prices below competitor’s offering.

• ECONOMIC CONDITIONS

• OVERALL MARKETING STRATEGY

• PRODUCT COST

• COMPETITORS

• ·GOVERNMENT LAWS & REGULATIONS

Clarifying products positioning & identifying its consumers will easily lay down price decision for product.

company wants to offer premium line of organic personal care products (shampoo, soap, lotion) must understand 1^st its target market & benefits they look in organic products to choose best pricing strategy.

• ECONOMIC CONDITIONS

• OVERALL MARKETING STRATEGY

• PRODUCT COST

• COMPETITORS

• GOVERNMENT LAWS & REGULATIONS

very strong impact on consumers purchases, also affect pricing decisions. Economic boom, recession, inflation, changes in interest rates affect consumer spending, and company’s costs of producing & selling product.

• ECONOMIC CONDITIONS

• OVERALL MARKETING STRATEGY

• PRODUCT COST

• COMPETITORS

• GOVERNMENT LAWS & REGULATIONS

impose price changes through laws and regulations. Sin Tax Reform Law / Republic Act 10351 approved in PH, imposed taxes on alcohol & tobacco products, increasing prices of these products.

• ECONOMIC CONDITIONS

• OVERALL MARKETING STRATEGY

• PRODUCT COST

• COMPETITORS

• GOVERNMENT LAWS & REGULATIONS

lowest price where company can earn profits

• PRICE FLOOR

• PRICE CEILING

• VALUE BASED PRICING

• COST-BASED PRICING

maximum price that customers willing to pay for a given product.

If product is priced below cost, company will lose money & negative profits

• PRICE FLOOR

• PRICE CEILING

• VALUE BASED PRICING

• COST-BASED PRICING

companies price products based on maximum price that consumers willing to pay for benefits they will get out of a product.

- company starts identifying needs & value perceptions of consumers, then creates product that satisfy those needs. Based on how consumers perceive value of product, price will be set after costs of producing product have been identified.

• PRICE FLOOR

• PRICE CEILING

• VALUE BASED PRICING

• COST-BASED PRICING