DECA Marketing Core - Price
(best example of the key concepts of KPI) explain factors affecting pricing decisions
There are two types of factors which affect pricing decisions - internal and external. Internal factors are derived from the company itself while external factors come from outside influences. Internal factors include the company's objectives for setting a price. For example, price may be set for survival, to gain profit and market share, or to convey quality. External factors include the state of the economy, the reseller's needs, competition, government actions, and social concerns.
(defining remark) explain the nature and scope of the pricing function
One of the four major elements of the marketing mix is price. Pricing is the activity by a firm to set a selling price. Pricing is an important strategic function because it is related to a company's profitability and the product's positioning in a market.
(best defining remark, gives examples, and relates the key term to the case for the KPI) describe the role of business ethics in pricing
Business ethics in pricing is based on the choice of doing what is right as it relates to consumer rights. Without thorough research, many consumers do not know the exact value of many products. For this reason, businesses should be ethical in their pricing strategies so they don't exploit the consumers' lack of knowledge. For businesses to be ethical, they should be transparent, honest, and responsible for their actions. I understand your concerns. Loss leader pricing may seem unethical to some, but it is by no means illegal or unethical. It is simply a pricing strategy. Loss leader pricing does not force a customer to purchase a product; it only attracts them to come to the store.
(best defining remark and give examples) explain the effect of pricing on promotional activities
Pricing is an activity done by a business to determine a selling price. Promotional activities include advertising, personal selling, public relations and sales promotion. Various promotional activities may effect pricing and likewise. The purpose of many promotions is to attract customers and if that promotion is tied to any type of discount, the price will be effected. For example, if a sale is being promoted, then the price will be reduced for a specific period of time, or may only be available with the use of a coupon or BOGO offer.
(best defining mark and gives examples) describe the impact of loss leader pricing on promotional activities
The loss leader pricing strategy is used when a product is priced so low that it is sold at a loss. This pricing strategy will have a huge impact on promotional activities and requires coordination of all advertising. The loss leader is used to draw customers into a particular store with the hope they will buy other items along with the loss leader item. Using loss leader pricing has the ability to gain market share and increase the profit from other items in the store. Once loss leader pricing is decided on, the promotional activity of advertising must support it to be effective.
(maximizes points for the showing-type KPI) evaluate pricing decisions
When evaluating the pricing strategy we found it resulted in increased profits and satisfied customers. By putting a loss leader price on the golf glove, golf ball and golf shoe sales have increased dramatically. When evaluating the pricing strategy we determined profits increased and customers left satisfied due to the variety of merchandise; using this strategy was successful. Because of the success of loss leader pricing, we will plan on using this strategy again in the future.
(defining remark and give examples of the KPI) describe pricing strategies yes or no question Pricing strategy is the method of determining the price of products and services. There is no magic recipe for pricing products and services for all businesses. For this reason, it is wise to know and understand the purpose of a variety of pricing options, so the best strategy may be used for each product and situation. Basic pricing strategies include: penetration pricing - The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased price skimming - charging a high price to have a substantial competitive advantage, however, the advantage is not usually sustainable economy pricing - no frills low prices are set psychological pricing - this approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis Determining how our products will be priced is critical to ensuring our customers will continue to buy from our company. For new products, it is important to understand our market position and the competitive products to set a price that will capture the attention of potential customers.
Yes, it is sufficient. Overall, steps 1 and 2 are solid.
