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1 There will be three marketing lectures a week until the end of term.
2 Today’s lecture looks at pricing.
3 Marketing is about advertising.
4 A customer focused organisation may not have a marketing depart-
ment.
5 In a customer focused organisation only marketing staff think about
customers.
6 Employees need to work as a team to deliver customer satisfaction.
7 Everyone needs to know how satisfied customers are.
21 Read the text about pricing strategies and find out:
• why companies set high prices for their goods;
• why companies set low prices for their goods.
HOW MUCH?
As all Business students know, the fundamentals of marketing are the 4
Ps – product, place, price and promotion. Of these 4, price might seem the
easiest to decide – how much does it cost me to produce this product or ser-
vice and how much do I think customers will be prepared to pay for it?
However, choosing a suitable pricing strategy is every bit as complex as
the other parts of the mix and your overall marketing strategy is unlikely to
be successful if the price is wrong. Let’s take a look at a few of the numer-
ous pricing strategies that could make or break a business.
Premium pricing
Premium pricing sets a relatively high price to reflect the high quality
of the product or service. This is the reason that some hotels are so much
more expensive than others – they know that being so expensive will be seen
by customers as a mark of quality.
Penetration pricing
New products and services are sold at an artificially low price in order
to attract customers and gain market share. When the product is estab-
lished, the price goes up. In recent years a number of mobile telephone net-
works have used this approach in the UK.
Economy pricing
Costs are kept to a minimum, with very little spent on manufacture or
marketing. This is reflected in a low priced product which will hopefully sell
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