This document provides a student task and learning objectives related to understanding pricing theory and strategy. The task asks students to answer questions about key pricing concepts in boxes, including defining pricing, identifying pricing objectives and strategies, explaining demand curves, defining elasticity and costs, and discussing the psychological and competitive aspects of pricing. The responses are to help students critically analyze pricing and apply concepts to discuss it as an effective marketing tool.
This document provides a student task and learning objectives related to understanding pricing theory and strategy. The task asks students to answer questions about key pricing concepts in boxes, including defining pricing, identifying pricing objectives and strategies, explaining demand curves, defining elasticity and costs, and discussing the psychological and competitive aspects of pricing. The responses are to help students critically analyze pricing and apply concepts to discuss it as an effective marketing tool.
This document provides a student task and learning objectives related to understanding pricing theory and strategy. The task asks students to answer questions about key pricing concepts in boxes, including defining pricing, identifying pricing objectives and strategies, explaining demand curves, defining elasticity and costs, and discussing the psychological and competitive aspects of pricing. The responses are to help students critically analyze pricing and apply concepts to discuss it as an effective marketing tool.
This document provides a student task and learning objectives related to understanding pricing theory and strategy. The task asks students to answer questions about key pricing concepts in boxes, including defining pricing, identifying pricing objectives and strategies, explaining demand curves, defining elasticity and costs, and discussing the psychological and competitive aspects of pricing. The responses are to help students critically analyze pricing and apply concepts to discuss it as an effective marketing tool.
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Tutorial Preparation Task 5: Price
Student Learning Objectives:
Familiarise students with the bases of pricing theory and practice. Facilitate a critical, reflective understanding of pricing perspectives and strategy. Encourage a more critical appreciation of pricing within the marketing process. Encourage the use of a more formal, evidence based approach to the exposition of personal knowledge.
Student Task:
Task a: (No need to submit answers to task a). You may like to search for additional information to help formulate your ideas and potential insights. Whilst, this is not compulsory, it would be a useful starting point and a valuable future resource for you .
Task b: (Submission required) Complete the ‘boxed’ questions overleaf to form a basis for this understanding.
Submit your answers via CANVAS before the next Tutorial
with your name and student number clearly marked below. All weekly prep tasks must be submitted to qualify for the exam You will receive standardised feedback for the exam/essay style question. Keep these safe and use as a revision tool for the assessments.
This topic will form the basis of discussion in your next Tutorial.
Your Name : Hammad Nafis Khandwani
Matriculation Number : H00452962 Date Submitted : 11/22/2023
Price PREP TASK 5
This prep task formalises your learning by asking a series of questions relating to the exam style question below. Provide brief answers to these questions within the boxes.
‘Discuss pricing as a vehicle for effective marketing’
Now outline answers to the following questions within the boxes:
Provide at least one definition of ‘pricing’ … ?
According to Prof. William J. Stanton, “Price is the amount of money and/or other items with utility needed to acquire a product.
Identify and describe 4 types of pricing objective and offer an example to illustrate each objective. Profit Maximization: The primary goal is to maximize profits. Example: A luxury brand like Gucci might adopt a profit maximization strategy by pricing its products high, taking advantage of a niche market willing to pay a premium for exclusivity. Increasing Market Share: capturing a significant amount of the market is the main goal, even at the expense of accepting smaller profit margins. Example: A new entrant like the Nothing Phone in the smartphone market might adopt a market share leadership strategy by offering high-quality phones at competitive prices. Survival: This objective is relevant when the company's survival is the main priority, such as in difficult economic times or highly competitive environments. Example: A small local business facing stiff competition from larger retailers might adopt a survival pricing strategy. Value-Based Pricing: This involves identifying pricing according with the customer's perception of the worth of the good or service. Example: A high-end coffee company such as Starbucks charges more than its rivals because it places an emphasis on the beans' quality, special mixes, and the whole coffee experience.
Draw demand curves for normal and luxury products and (briefly) explain why they are different
The demand for normal products increases with rising consumer income and decreases with dropping consumer income. These products are regarded as a daily necessity. People are likely to buy more of these things as their income rises, and they may buy less of these goods as their income falls. Luxury goods are regarded as optional or non-essential things and are frequently linked to higher income levels. Compared to ordinary items, the demand for luxury goods is less susceptible to price fluctuations. When buying luxury goods, consumers are frequently more motivated by things like quality, exclusivity, and brand prestige than by immediate cost concerns.
Define ‘price elasticity of demand’ and write down the formula for calculating this measure Price elasticity of demand is a measure of how responsively the amount of a good or service is desired in reaction to a change in price. The formula:
Define ‘fixed’ and ‘variable’ costs and provide an example of each
Fixed Costs: These are costs that remain constant regardless of sales or manufacturing size. Regardless of how much a business produces in terms of goods or services, these expenses never change. Example: For a Factory, the cost of rent is fixed. The rent is the same regardless of how many units the company produces—1,000 or 10,000. Variable Costs: These are costs that fluctuate in relation to the quantity of goods produced or sold. These expenses fluctuate according to how much a business produces in terms of goods or services. Example: A kind of variable cost in product manufacturing is the price of raw materials. The cost of raw materials rises as a company produces more units; costs fall in direct proportion to a drop in production.
Identify 4 types of pricing strategy and provide examples for each
Penetration Pricing: Example: Launching a new smartphone at a lower-than-usual price to quickly capture a significant market share. Skimming Pricing: Example: Introducing a new gaming console with cutting-edge features at a premium price and later reducing the price to attract a broader customer base. Value-Based Pricing: Example: Luxury brands set prices for products based on perceived value, considering factors such as prestige and exclusivity. Dynamic Pricing: Example: Airlines adjusting plane ticket prices in real-time based on factors like demand, day of the week, holidays, and seat availability.
How might psychology be used by consumers and marketers within pricing decision- making? Pricing decisions are heavily influenced by consumer psychology. To influence consumer impressions, marketers strategically use techniques including unusual pricing, anchoring, and discounting. Odd pricing, such as $9.99, gives the impression of reduced costs, whereas anchoring offers a costly choice upfront to make lower rates appear more affordable. Time- limited promotions take use of people's fear of missing out, while dynamic pricing modifies prices in real-time to maximize sales. These psychological techniques improve perceived value and have an impact on consumers' purchase decisions and overall market success.
Recall an occasion where you experienced deceptive pricing practice and explain how it made you feel I remember going to McDonald's hoping to get a good deal on their marketed "value meal." The sign outside looked tempting, offering a burger, fries, and a drink that looked reasonably priced. I made my order, excited about the discount, only to find out at the counter that the price did not include my favorite drink size or burger. The total cost was far more than anticipated since additional fees soon increased. I felt a little deceived and frustrated after that encounter. The first pricing information didn't seem to be a true depiction of what I would actually spend, more of an advertising stunt. Such deceptive pricing methods have the potential to damage consumer and business trust seriously.
Explore the value/usefulness of understanding Pricing
Profit Maximization: Pricing directly impacts a company's profitability. By setting the right prices, businesses can maximize their profits and ensure long-term sustainability. Competitive Advantage: A well-thought-out pricing strategy can provide a competitive edge. This doesn't necessarily mean having the lowest prices but offering value that justifies the price, whether through quality, unique features, or superior service. Consumer Viewpoint: Pricing has an impact on how consumers view a good or service. While lower prices could indicate affordability, higher costs might be linked to superior quality.
Well done … now, I can offer you a BOGOFF deal on Prep feedbacks … interested?
