Price, place and promotion
Introduced| English | Meaning |
|---|---|
| cost-plus/kɒst plʌs/ | cost-plus |
| penetration/ˌpenɪˈtreɪʃn/ | Setting a relatively low initial price to attract customers and build market share. |
| skimming/ˈskɪmɪŋ/ | Setting a relatively high initial price for a new product before lowering it to reach additional customers. |
| competitive/kəmˈpetɪtɪv/ | competitive |
| psychological/saɪkəˈlɒdʒɪkl/ | psychological |
| distribution/ˌdɪstrɪˈbjuːʃn/ | distribution |
| wholesalers/ˈhəʊlseɪləz/ | wholesalers |
| channel/ˈtʃænl/ | channel |
| above-the-line/əˈbʌv ðə laɪn/ | above-the-line |
| below-the-line/bɪˈləʊ ðə laɪn/ | below-the-line |
| sales promotions/seɪlz prəˈməʊʃnz/ | sales promotions |
Getting it to the customer at the right price
- A product is ready — now, what price, sold where, promoted how? Three of the four Ps decide whether it sells.
- Each must fit the product, the market and the others.
Marketing mix lab
See which part of the marketing mix changes in each real decision.
Setting a low price to win market share quickly is:
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Penetration pricing uses a low price to gain share.
Launching at a high price for keen early buyers, then lowering it, is:
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Price skimming targets early adopters first.
Adding a fixed profit margin to the unit cost is ______-plus pricing.
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Cost-plus pricing adds a margin to cost.
Price strategies
- Cost-plus 成本加成: add a margin to cost. Penetration 渗透定价: low price to win share.
- Skimming 撇脂定价: high launch price for keen early buyers. Competitive 竞争性定价 and psychological 心理定价 pricing.
Penetration pricing starts low to win share; skimming starts high then falls over time
The same price fall raises quantity a lot when demand is elastic, little when inelastic
In the marketing mix, "place" refers to:
Difficulty 1/5 · 100 coins + a small bonus on first completion today
Place is the distribution channel.
Place (distribution 分销)
- Place is how the product reaches the customer: shops, wholesalers 批发商, or direct/online.
- A shorter channel 渠道 gives more control; a longer one gives wider reach.
A short channel sells direct for more control; a longer channel adds wholesalers and retailers to reach more buyers
Above-the-line promotion uses targeted methods such as direct mail and sponsorship.
Difficulty 1/5 · 100 coins + a small bonus on first completion today
False. Above-the-line promotion uses paid mass media such as TV, radio and press adverts. Direct mail and sponsorship are below-the-line methods.
Promotion
- Above-the-line 线上广告: paid mass media (TV, online ads) — wide reach.
- Below-the-line 线下促销: targeted methods (sales promotions 销售促进, direct mail, sponsorship, social media).
Worked example. A new phone uses skimming (high launch price), sells direct online for control, and promotes with social-media influencers (below-the-line) — a mix tuned to tech-keen early adopters.
You've got it
- price strategies: cost-plus, penetration, skimming, competitive, psychological
- place = the distribution channel (direct vs through intermediaries)
- promotion: above-the-line (mass media) vs below-the-line (targeted)
Write from a launch price of 4
- A firm launches at a price of 4, then plans to raise it to 9 once customers are used to the product.
- Name the pricing strategy.
A firm launches a product at a price of 4 and plans to raise it to 9 after customers have tried it. What pricing strategy is the launch price of 4?
A low opening price that later rises is penetration.
What is the launch price of 4 an example of?
Difficulty 1/5 · 100 coins + a small bonus on first completion today
The low start is there to buy a foothold. Other options — Skimming (because the price will change later); Cost-plus (because 4 is a number).