Pricing products
Organizational considerations
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- 1. Nature of Market and Demand
- 2. Pricing in different markets
- 3. Consumers’ perception of price and value
| Organizational considerations: management should decide, who within the organization, set prices. In small companies, it is decided by top management, and in large companies, it will be decided by corporate management.
External Factors Affecting Pricing Decisions External factors affecting pricing decisions include: the nature of market and demand, competition, and other environmental elements. 1. Nature of Market and Demand: Although costs set the lower limits of the prices, the market and demand set the upper limit. Management considered a price increase as way to push revenue above the break-even point. Cross selling- Cross selling opportunities abound in the hospitality industry. A hotel can cross sell F&B, exercise room service, and executive support services such as a fax, and can even sell retail products. Upselling: This occurs through training of sales and reservation employees to continuously offer a higher- priced product, rather than setting for lower prices. Example- offering after dinner coffee can be turned into upselling opportunity 2. Pricing in different markets: There are 4 types of markets and the sellers’ pricing freedom varies with different types of markets. Pure competition: - consists of many buyers and sellers trading in a uniform commodity. Pure monopoly: - consists of one seller and many buyers. Monopolistic competition: - consists of one buyer who trade over a range of prices, selling identical and homogenous products. Oligopolistic competition: - consists of few sellers who are highly sensitive to each other’s pricing and marketing strategies. 3. Consumers’ perception of price and value: In the end it is the consumer who decides whether a product’s price is right. When setting prices, management must consider how consumers perceive price and the ways that these perceptions affect consumer’s buying decisions. Download 23.6 Kb. Share with your friends:
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