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Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016 Marketing Management MRKT 231 Page 39 of 54 Fig.Describe how can we select a pricing method?3.6: Break-Even Chart for Determining Target-Return Price and Break- Even Volume Source: Marketing Management, Philip KOTLER, Kevinlane KELLER, Salah HASSAN, Imad BAALBAKI, Hamed SHAMMA, PEARSON education 2012.3.4: Cost per Unit at Different Levels of Production per Period Marketing Management, Philip KOTLER, Kevinlane KELLER, Salah HASSAN, Imad BAALBAKI, Hamed SHAMMA, PEARSON education 2012.3.5: The Three Cs Model for Price Setting Marketing Management, Philip KOTLER, Kevinlane KELLER, Salah HASSAN, Imad BAALBAKI, Hamed SHAMMA, PEARSON education 2012.Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016 Marketing Management MRKT 231 Page 42 of 54 Step 6: Selecting the Final Price In selecting the price, the company must consider additional factors, including o Impact of other marketing activities o Company pricing policies o Gain-and-risk sharing pricing o Impact of price on other parties Chapter questions 1.Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016 Marketing Management MRKT 231 Page 40 of 54 Step 4: Analyzing Competitors' Costs, Prices, and Offers o The company must take competitors' costs, prices, and possible price reactions into account.Page 385 Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016 Marketing Management MRKT 231 Page 41 of 54 Three major considerations in price setting are summarized in Fig.Page 384 Target Costing o Costs can also change as a result of a concentrated effort by designers, engineers, and purchasing agents to reduce them through target costing.o The introduction of any price or the change of any existing price can provoke a response from customers, competitors, distributors, suppliers, and even government.2.4.5.6.2.3.4.5.6.7.8.9.10.11.12.13.15.16.17.18.

Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016
Marketing Management MRKT 231 Page 39 of 54
Fig. 3.4: Cost per Unit at Different Levels of Production per Period
Marketing Management, Philip KOTLER, Kevinlane KELLER, Salah HASSAN, Imad
BAALBAKI, Hamed SHAMMA, PEARSON education 2012. Page 384
Target Costing
• Costs can also change as a result of a concentrated effort by
designers, engineers, and purchasing agents to reduce them
through target costing.
• The firm must examine each cost element—design,
engineering, manufacturing, sales—and consider ways to
bring down costs to within the target cost range.
Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016
Marketing Management MRKT 231 Page 40 of 54
Step 4: Analyzing Competitors’ Costs, Prices, and Offers
• The company must take competitors’ costs, prices, and
possible price reactions into account.
• The introduction of any price or the change of any existing
price can provoke a response from customers, competitors,
distributors, suppliers, and even government.
Step 5: Selecting a Pricing Method
Fig. 3.5: The Three Cs Model for Price Setting
Marketing Management, Philip KOTLER, Kevinlane KELLER, Salah HASSAN, Imad
BAALBAKI, Hamed SHAMMA, PEARSON education 2012. Page 385
Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016
Marketing Management MRKT 231 Page 41 of 54
Three major considerations in price setting are summarized in Fig. 3.5:
• Costs
• Competitors
• Customers
Six price-setting methods:

1. Markup pricing - pricing an item by adding a standard
   increase to the product’s cost.


2. Target-return pricing - determining the price that would
   yield the firm’s target rate of return on investment (ROI).
   Fig. 3.6: Break-Even Chart for Determining Target-Return Price and
   Break- Even Volume
   Source: Marketing Management, Philip KOTLER, Kevinlane KELLER, Salah HASSAN, Imad
   BAALBAKI, Hamed SHAMMA, PEARSON education 2012. Page 387


3. Perceived-value pricing - the value promised by the
   company’s value proposition and perceived by the
   customer.


4. Value pricing - winning loyal customers by charging a
   fairly low price for a high-quality offering.


5. Going-rate pricing - price based largely on competitors’
   prices.


6. Auction-type pricing - price achieved in an auction.
   Different types of auctions include English(ascending
   bids), Dutch (descending bids), and sealed-bid auctions.
   Jazan University- College of Business Administration Department of Marketing and E-Commerce- 2016
   Marketing Management MRKT 231 Page 42 of 54
   Step 6: Selecting the Final Price
   In selecting the price, the company must consider additional factors,
   including
   • Impact of other marketing activities
   • Company pricing policies
   • Gain-and-risk sharing pricing
   • Impact of price on other parties
   Chapter questions


7. What is a product?


8. According to your course explain the different product characteristics.


9. What are product levels?


10. What are the different types of product using the type use as criteria?


11. What are the different types of product using the nature of the product
    (tangible or intangible) as criteria?


12. How can we differentiate our product to be branded?


13. Describe the new pricing environment.


14. How companies price?


15. Explain the different steps of price setting.


16. Explain the relationship between price and demand using demand curve.


17. How can we estimate demand curves?


18. What is price elasticity of demand? Give examples.


19. Explain the relationship between types of cost and levels of production


20. What is target costing?


21. Describe how can we select a pricing method?


22. Explain the different price setting methods.


23. How can we selecting the final price?


24. What are the SERVQUAL attributes? Answer: (Page 356- in the core
    textbook)