TYPES OF MARKET AND THEIR EFFECT ON
PRODUCT PRICE
A) Monopolistic
market: may also be called the non-regulated monopolistic market. This is where
one firm is the single seller of a particular product. They are the price
setters they set the price according to their objectives, high price when they
want to maximize profit, low price when they want to maximize revenue.
b) Regulated
monopolistic market; here also a single firm is the producer of a particular product.
They are the price setters though they are regulated. They set their prices
according to what the market can bear. This is done so that they can attract
other firms to compete, penetrate the market faster or fear of regulation by
the government.
c)
Oliogopolistic market: there are few sellers who are highly sensitive to each
other’s pricing and marketing strategies but with similar but differentiated products
hers no free entry to this market. The sellers have control over pricing of products.
An example is Shell, Kenol Kobil and Total
d) Pure
competition: this is a situation where there are many buyers and sellers in the
market with similar products. The market sets the price and if a competitor
increases his price people get the product from another competitor. Promotions,
advertisements are mainly for awareness. An example is cooking fat; kimbo and
kasuku.
e)
Monopolistic competition; here the firms are the price setters, there is
aggressive market campaigns and a seller watches the others prices. Products
may vary in feature and accompanying services .an example is the competition
between Zain and Safaricom.
PRICING
APPROCHES:
a)Primium pricing; products are
priced highly because they are unique.this is present where a substancive
competitetive advantage exists. Mainly luxuries ann example is a cruise on a
ship. B)Competition based
pricing: Also called going rate pricing .based on competitors prices on a
similar product. It can be higher or lower.
C)Percived value
pricing:price is based on the perceived value of the product by the consumers
and the company itself.mainly used in product positioning. d)Cost based pricing :also
known as simplified pricing technique.it invoves adding standerd mark up to the
products cost of production to get the final selling price.it ignores demand
and competition. Mark
up pricing = Unit cost
(1-Desired % return on
sales)
e)Sealed
bidding pricing: based on customers
proposal .
f)Target return pricing :price that helps yield return on investment
TRP = unit costs + Desired returns % ´ capital invested
Unit
sales
g)Economy
pricing: here the prices are low because the marketing and manufacture costs
are low an example is the price of bar soap.
f) Break even analysis pricing: the price is set to break even on cost
of marketing a product .
Breakeven point in units = Total
fixed Cost
(Selling Price-Average
variable cost)
g)Optional
pricing :here the prices increase once the consumer starts to buy.an example is
when buying an air ticket extra is paid if a peson wants a window sit h)Value
based pricing: here the price is set according to the buyers perception rather than sales costs .
i) psychological pricing: here
the marketer wants the customer to respond to emotional rather than the
rational. Prices are set a cent lower or a shilling lower an example is 999.99
references:
www.marketing teacher.com
26.10.10
No comments:
Post a Comment