price is the amount of money charged for a product or service or the sum of the values that

consumers exchange for the benefits of having or using the product or service. All profit and
nonprofit organizations must set prices on their products and services
internal factors a. marketing objectives
b. marketing mix strategy
c. costs
d. organizational considerations
external considerations a. market demand
b. competition
c. economic conditions
d. resellers price
the government
e. social concerns
pricing should follow a predetermined strategy
customer value-based pricingis setting the price based on buyers' perceptions of value rather
than on the seller's cost. Good pricing usually starts with customers and their perceptions of
value.
good-value pricing is offering just the right combination of quality and good service at a fair
price
good-value pricing involved introducing less expensive versions of established, brand-name
products (ex. jollibee offers value meals)
value-added pricing is attaching value- added features and services to differentiate a
company's offers and charging higher prices
cost-based pricing refers to the company's costs and is the primary consideration. It is the
setting of prices based on the costs for producing, distributing, and selling the product, plus a fair
rate of return for its effort and risk
cost-based pricing If it costs the company more than competitors to produce and sell a similar
product, the company will need to charge a higher price or make less profit, putting it at a
competitive disadvantage. T
fixed costs/overhead costs that do not vary with production or sales level
fixed costs/overhead example of this is a company having to pay utility bills wtv the sales
outcome it
variable costs vary directly with the level of production
variable costs these costs tend to be the same for each unit produced because their total varies
with the number of units produced.
total costs are the sum of the fixed and variable costs for any given level of production
cost-plus pricing (mark-up pricing) adding a standard make-up to the cost of the product
break-even pricing (target return pricing) setting a price to break even on the costs of making
and marketing a product or setting a price to make a target return
competition-based pricing involves setting prices based on a competitor's strategies, costs of
prices, and market offerings. IS APPLIED IN HIGH COMPETITIVE MARKETS (ALMOST ALL
THE SAME PRICE)
new product pricing companies bringing out a new product face the challenge of setting prices
for the first time.
price-skimming It is also referred to as "market-skimming pricing."
price-skimming It is setting a high price for a new product to skim maximum revenues
layer by layer from the segments willing to pay the high price; the company makes fewer but
more profitable sales.
conditions for price-skimming a. First, the product's quality and image must support its higher
price and enough buyers must want the product at that price.

b. Second, the costs of producing a smaller volume cannot be so high that they cancel the
advantage of charging more.

c. Finally, competitors should not be able to enter the market easily and undercut the high price
market-penetration pricing Rather than setting a high initial price to skim off small but
profitable market segments, some companies use market-penetration pricing. It refers to setting
a low price for a new product to attract a large number of buyers and a large market share.
product mix pricing for products that are part of a broader product mix
product line pricing separation of goods and their variations into categories by creating price
gapes to emphasize differences in quality
product line pricing an example of this is clothing; an outlet is likely to have product lines
based on the material and tailoring quality of different items of clothing
optional-product pricing the main product is sold at a low margin or near cost price and
marketers focus on promoting the extras and upgrades
optional-product pricing airlines offering optional extra services
captive product pricing any accessory must be sold in addition to a base product
captive product pricing razor blades cartridges, video games, and ink cartridges for
printers
by-product pricing setting a price for by-products to make the main product's price more
competitive
by-product pricing food production such as wheat germ (comes from wheat milling)
product bundle pricing combining several products and offering the bundle at a reduced
price
product bundle pricing examples of this is including option packages on new cars, value
meals at restaurants, and cable tv channel plans.
place third marketing tool, refers to the distribution or the methods and location you use for
your products or services to be easily accessible.
place also referred to as marketing channels or channels of distribution
upstream is the set of companies that supply the raw materials, components, parts,
information, finances, and expertise needed to create a product of service.
downstream refers to marketing channel partners, such as wholesalers and retailers; form a
vital connection between the company and its customers.
chains and channels comprise the value delivery network.
value delivery network It is the network made up of the company, suppliers, distributors,
and ultimately customers who partner with each other to improve the performance of the entire
system in delivering customer value.
supply chain is the make-and-sell view of the company or business, while the demand chain is
the sense-and-respond view of the market.
planning ____________in this marketing mix should start by identifying the needs of target
customers, to which the company responds by organizing a chain of resources and activities to
create customer value
distribution channel is a set of interdependent organizations involved in the process of making
a product or service available for use or consumption by the consumer or business user
direct channel of distribution how a company gets its product straight to the consumer without
using any intermediaries
direct channel more effective channel for small businesses to use because its cost-effective
direct channels Examples of these are purchasing or selling online
indirect channel of distribution typically involves a product passing through additional
steps as it moves from the manufacturing business via distributors to wholesalers and then retail
stores
indirect channels through this distribution channel, companies gain a significant competitive
advantage
indirect channel the main challenge with this distribution channel is the distance you put
between you and your customer
channel partners are businesses that are owned and operated independently from the
manufacturer to perform a specific function in the movement of the product.
retail is the sale of goods and services from businesses to an end-user (called a customer).
retailing is defined as all activities required to market consumer goods and services to
ultimate consumers who are purchasing for individual or family needs
sari-sari means variety
wholesalers is a person whose business is buying large quantities of goods and selling them
in smaller amounts, for example, to shops
wholesalers can sell their products for a lower unit price as they are selling in bulk, which
reduces the handling time and costs involved
wholesalers merchant middlemen or distributors
drop shipper an intermediary that takes orders and payment from the customer, then arranges
to have the merchandise shipped to the customer directly from the supplier.
rack jobber is a wholesaler that buys merchandise and resells it on "racks" inside a retail
store, in partnership with the retailer.
broker is a wholesaler that does not take title to goods and whose function is to bring buyers and
sellers together and assist in negotiation
agent a representative, either of a buyer or a seller, who performs only a few functions and
does not take title to goods.
supply chain is part of the operating model of a company (with the other part being the offering
model for a company to grow); is built around the needs of customers effectively and efficiently
can provide lesser waste and superior return