- use competitive pricing & offers as reference points
- calculate elasticity of demand (anticipated sales volumes based on price)
- benchmark product in market
- maximise profitability (identify more profitable customers & segments)
PRICE SENSITIVITY - varies considerably e.g. business traveller v. family on holiday
- customers have concept of 'just price'
- will search for info prior to purchasing, but forget soon after
- will buy a bargain without paying attention to need or actual price
PRICE PERCEPTION - can react to price increases by buying!
- expect more increases so stock up
- assume higher quality
- 'snob' appeal
FACTORS AFFECTING PRICING DECISIONS Intermediaries' objectives - conflict can arise between suppliers & intermediaries
Suppliers - may seek rise in price of supplies if they see products rising
Competitors' actions & reactions - petrol move in unison, supermarkets in price wars
Inflation - may rise, in periods of inflation, to maintain real prices (supplies, labour will increase)
Income effects - rising incomes means price is less important variable and vice versa
New product pricing - difficult as no reference points, find alternative references in another market
Multiple products - range of interrelated products means you can use 'loss leaders'. One product at very low price makes consumers buy others in range with higher price margins e.g. razors & blades. Supermarket own-brand.
Quality connotations
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