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BasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn1Chapter12PricingObjectivesandPoliciesBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn2StrategyPlanningforPriceTargetMarketProductPlacePromotionPriceDiscountsandallowances—towhomandwhenPricelevelsoverproductlifecyclePriceflexibilityPricingobjectivesGeographicterms-whopaystransportationandhowBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn3PriceasseenbyConsumersorUsersProduct:PhysicalgoodServiceAssuranceofqualityRepairfacilitiesPackagingCreditPlaceofdeliveryWhenavailablePerceivedriskPurchaseeffort&timeListPriceLess:DiscountsforQuantitySeasonalCashTemporarysalesLess:AllowancesforTrade-insDamagedgoodsLess:RebateandcouponvaluePlus:TaxesPrice=Something=BasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn4PriceasseenbyChannelMembersProduct:Branded—wellknownGuaranteedWarrantedService—repairfacilitiesConvenientpackagingforhandlingPlacePricePromotionListPriceLess:DiscountsforQuantitySeasonalCashTradeorfunctionalTemporary‘deals’Less:AllowancesforDamagedgoodsAdvertisingStockingPlus:TaxesandtariffsPrice=Something=Availability—whenandwherePromotionaimedatcustomersPrice-levelguaranteeSufficientmarginBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn5PossiblePricingObjectivesPricingobjectivesProfitorientedSalesorientedStatusquoorientedTargetreturnMaximiseprofitsDollar/unitsalesgrowthGrowthinmarketshareMeetingcompetitionNon-pricecompetitionBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn6OrganisationalPricingPoliciesAdministeredprices—Consciouslysettingpricesaimedatreachingthecompany’sobjectivesPriceflexibility—Fixed-pricepolicy—offeringthesamepricetoallcustomerswhopurchaseproductsunderessentiallythesameconditionsandinthesamequantities—Flexible-pricepolicy—offeringthesameproductandquantitiestodifferentcustomersatdifferentpricesBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn7PriceLevelPoliciesPriceSkimming—sellingtothetopofthemarketatahighprice,beforeaimingatmorepricesensitivecustomersPenetrationPricing—attemptingtoselltothewholemarketatonelowpriceCompetitivePricing—settingpricesrelativetothecompetitionBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn8DiscountPoliciesDiscountsarereductionsfromlistpricethataregivenbysellerstobuyerswhoeithergiveupsomemarketingfunctionorprovidethefunctionthemselvesQuantitydiscounts—Cumulativequantitydiscounts•reductionsinpriceforlargerpurchasesoveragivenperiod•encouragerepeatpurchasingtocreatecustomerloyalty—Non-cumulativeencouragelargeorders•reductionsinpriceforpurchasingalargerquantityinasingleorderSeasonaldiscounts—discountsofferedtoencouragebuyerstopurchaseearlierthancurrentdemandrequires—smoothoutdemandBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn9DiscountPoliciescontinuedCashdiscounts—reductionsinthepricetoencourageearlypaymentofaccountsCreditsale—selleragreestodelayfullpaymentwith/withoutaddinginterestTrade(functional)discounts—pricereductiongiventochannelmemberfortasksundertakenSpecialsaleprices—temporarydiscountfromthelistpriceEverydaylowpricing—settingalowlistpricewithoutrelyingondiscountsandallowancesCoupons—uponpresentationconsumerreceivesadiscountonlistpriceCashrebates—refundstoconsumersafterapurchasehasbeenmadeBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn10AllowancesAllowances—reductionsinpricegiventobuyersfordoingsomethingoracceptinglessofsomething—Advertisingallowance•pricereductiongiventointermediariestoencouragethemtopromotethesupplier’sproductslocally—Stockingallowances•pricereductiongiventointermediarytoobtainshelfspaceforproductorproductline—Trade-inallowances•pricereductionsforusedproductswhensimilarnewproductsareboughtBasicMarketingAManagerialPerspective3rdAustralasianeditionCopyright©2001McGraw-HillBookCompanyAustraliaPtyLtdMcCarthyetal.‘BasicMarketing’3rdAustedn11GeographicPricingPoliciesFreeonBoard(F.O.B.)atsomeplace—Examples:F.O.B.seller'sfactory,F.O.B.delivered,F.O.B.factory—freightprepaidZonePricing:anaveragefreightchargetoallbuyerswithinspecificgeographicareasUniformDeliveredPricing:thesame(average)freightchargetoallb