Ch. 11: Price: Determining Monetary and Nonmonetary Incentives and Disincentives

Three pricing options to consider once price objective is agreed upon

1) cost-based pricing- purchase costs 2) competition-based pricing- better than competitors) 3) value-based pricing- analysis of "price sensitivity"

Six price-related tactics

1) increase monetary benefits w/ desired behavior 2) increase nonmonetary benefits w/ desired behavior 3) decrease monetary costs w/ desired behavior 4) decrease nonmonetary costs w/ desired behavior 5) increase monetary costs w/ competing behavior 6) increase nonmonetary cost w/ competing behavior

principles that guide price setting

1) maximizing retained earnings 2) recovering costs 3) maximizing the number of target adopters 4) social equity 5) demarketing (e.g. taxes on cigarettes)

Step 7 (second step in developing strategic marketing mix)

determine monetary and nonmonetary incentives and disincentives, i.e. price

monetary incentives

discount coupons, rebates, cash incentives, price adjustments

monetary disincentives

fines, taxes, decreased funding

nonmonetary cost

intangible costs associated w/ time, effort, and energy required to perform the behavior, psychological risks or losses that might be perceived or experienced, and any physical discomforts that might be related to a behavior.

nonmonetary disincentives

negative public recognition

nonmonetary incentives

positive public recognition, appreciation, pledges

monetary cost

related to goods and services associated w/ adopting a behavior (e.g. buying a life vest or paying for a swim class for toddlers)

Price

the cost the target audience associates with the desired behavior