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marketing mix - price

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Introduction

Marketing Mix - Pricing There are a number of pricing policies which a business may adopt. The choice of policy depends on: � Market-led pricing This method is where a business accepts the price at which competitors are charging at sets its price at the same level or slightly lower. This is usually used in a market were there is a strong number of competitors. My product would fit into this category as there is a lot of competitors in the drinks market. � Cost-based pricing Were you work out the businesses total fixed and variable costs and then adding on the percentage profit. ...read more.

Middle

* Penetration pricing This is where a low price is set initially in order to gain customers then the price increases when the customers realize the quality of the product. This method could be used for my sports drink product as I could set the price low to begin and then increase the price when the customers realize the quality of my product. * Destruction pricing This method is designed to destroy competitor's sales or to close down their business. This method is where a business sets an existing product or a new product at a radically low price to out do competitors. ...read more.

Conclusion

* The factors that affect price - Costs of production The producer will have to calculate the total costs of making the product. The price of the product will rely on how high or low these costs are. - Need to make profit The aim in any business is to make profit, so the product must be priced at a rate that will cover all the costs of production and also make a profit for the business. - Competition in the market The aim is to set a price for your product that will encourage customers away from competitors. To achieve this the price is slightly lowered to begin and the increased when the customers start buying your product. ...read more.

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