View source for Price Decisions in the Marketing Mix

Some examples of pricing decisions to be made include:
* Pricing strategy (skim, penetration, etc.)
* Suggested retail price
* Volume discounts and wholesale pricing
* Cash and early payment discounts
* Seasonal pricing
* Bundling
* Price flexibility
* Price discrimination



<html><img src = ""/static/files/MBI/Module%206/pricingrange.PNG" width="600"/></html>



Frequent mistakes are determining prices [[Mark-up pricing|Mark-up pricing]] and [[Competitive match pricing|Competitive match pricing]].

Which price maximizes long-term profits?
* Customer perceived benefits and price elasticity
* Competition (now and later)
* Business model
* Psychological effect
* Segmentation and positioning

Value creation per unit looks like this:
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<img src="/static/files/MBI/Module%206/ValueCreation.PNG" width=400>
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Tests to determine price elasticity:
{| class="wikitable"
!Method
!Advantages
!Disadvantages
|-
|Price experiments
|* Fast<br>* Low risk <br>* Many variants can be tested
|* External validity (transfer?) <br>* Internal validity (too strong simplification
|-
|Classic market tests
|* Realistics <br>* Allows for good predictions
|* Reaction to heterogeneous prices? <br> * Positioning jeopardized? <br>* High cost / time
|-
|Tests over the internet
|* Realistic <br>* Very fast <br>* Limited cost and time
|* Reaction to heterogenous prices? <br>* "Unfair"? (Amazon) <br>* Long range effects? <br> * Not suitable for all distribution channel
|-
|}Part of [[Marketing mix (Four P's of marketing)|Marketing mix (Four P's of marketing)]]
[[Category:mbi]]

[[Category:Term]]