Page 33 - MARKETING MIX

PRICING

Competition-Based

Pricing

A strategy of going-rate pricing is the establishment of price based largely on those of

competitors, with less attention paid to costs or demand. A firm might charge the same,

more, or less than major competitors. When elasticity is hard to measure, firms feel that

the going price represents the collective wisdom of the industry concerning the price that

will yield a fair return. They feel that holding to the going price will avoid harmful price

wars.

e There have been no e Because price is not a big
g complicated calculations g influence when sellers adopt

a required. Sellers just follow a t the same pricing as

t n
n market prices or market a competitors, further marketing

a leaders' prices. In a highly v activities such as aggressive
v competitive market, the cost of d advertising, improved

d price-based marketing is also a customer service, market

A reduced. s saturation, and so on must be

i done to attract sales.
D

Demand-Based

Pricing

At times, prices are determined by the

demand for the product. Under this method,

without paying much attention to cost and

competitors' prices, the marketers try to

ascertain the demand for the product. If the

demand is high they decide to take

advantage and fix a high price. If the

demand is low, they fix low prices for their

product. At times they resort to differential

prices and charge different prices from

different groups of customers depending

upon their perceived values and capacity to

pay. Take the case of cinema halls where

the rates of tickets differ for the different

sets of rows in the hall.

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