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• Module overview
• 1. What is marketing?
  • 1.1 What is marketing?
    • 1.1.1 Different uses of the term 'marketing'
    • 1.1.2 Different levels of marketing
    • 1.1.3 A definition of marketing
  • 1.2 Clarification of the marketing definition
    • 1.2.1 Outputs
    • 1.2.2 Inputs
    • 1.2.3 Exchange
  • 1.3 Development of marketing
  • 1.4 Types of marketing
  • 1.5 What is a service?
    • 1.5.1 Characteristics of services
    • 1.5.2 A service definition
    • 1.5.3 Classifications of services
    • 1.5.4 Services: a growth sector
  • 1.6 Marketing in the maritime industry
  • 1.7 Towards social and ethical responsibility
    • 1.7.1 Common criticisms of marketing
    • 1.7.2 Social impact of marketing
  • 1.8 Summary

• 2. Strategic marketing management

  • 2.1 Introduction
  • 2.2 The environments
    • 2.2.1 External environment
    • 2.2.2 Internal environment
    • 2.2.3 Mission statements and objectives
    • 2.2.4 Resources
  • 2.3 Controllable factors
  • 2.4 The strategic marketing management process
    • 2.4.1 Planning
    • 2.4.2 Implementation and control
    • 2.4.3 Marketing plan
  • 2.5 Types of marketing strategies
    • 2.5.1 Strategic considerations for services
  • 2.6 Summary

• 3. Marketing research and information systems

  • 3.1 Introduction
  • 3.2 The marketing information system (MIS)
  • 3.3 Marketing research
    • 3.3.1 Scope of research
  • 3.4 The marketing research process
    • 3.4.1 Step 1: defining the problem
    • 3.4.2 Step 2: analysing the situation
    • 3.4.3 Step 3: obtaining problem-specific data
    • 3.4.4 Step 4: interpreting the data
    • 3.4.5 Step 5: solving the problem
  • 3.5 Summary

• 4. Consumer and B2B buying behaviour

  • 4.1 Introduction
  • 4.2 Consumer buying behaviour
    • 4.2.1 Psychological influences
    • 4.2.2 Cultural and social influences
    • 4.2.3 The decision-making process
  • 4.3 B2B buying behaviour
    • 4.3.1 Business buying processes
    • 4.3.2 Main types of business markets
  • 4.4 The buying of services
  • 4.5 Summary

• 5. Segmenting markets, targeting and positioning

  • 5.1 Introduction
  • 5.2 Market segmentation
    • 5.2.1 Dimensions used to segment markets
  • 5.3 Target markets
  • 5.4 Market positioning
  • 5.5 Summary

• 6. Product planning and decisions

  • 6.1 Introduction
  • 6.2 Product concepts
    • 6.2.1 The total product concept
    • 6.2.2 Product classifications
    • 6.2.3 The service offering
  • 6.3 The product mix
  • 6.4 Branding
  • 6.5 Packaging
  • 6.6 Product life-cycle
  • 6.7 Product development
  • 6.8 Summary

• 7. Pricing considerations

  • 7.1 What is the 'price' of a product?
  • 7.2 Pricing environments
  • 7.3 Pricing objectives
  • 7.4 Pricing policies
    • 7.4.1 Discount and allowance policies
  • 7.5 Price setting
    • 7.5.1 Cost-oriented price setting
    • 7.5.2 Demand-oriented price setting
    • 7.5.3 The price setting process
  • 7.6 Summary

• 8. Marketing logistics networks

  • 8.1 Introduction
  • 8.2 Definition of distribution
  • 8.3 Channels of distribution
    • 8.3.1 Selecting channels
    • 8.3.2 Main Australian channels
    • 8.3.3 Distributing services
    • 8.3.4 Managing channels
  • 8.4 Managing distribution
  • 8.5 Distribution and ports
  • 8.6 Summary

• 9. Integrated marketing communications

  • 9.1 Communication with a purpose
  • 9.2 Marketing communication process
  • 9.3 The promotional mix
  • 9.4 Managing advertising
  • 9.5 Managing publicity and public relations
  • 9.6 Managing personal selling
  • 9.7 Managing sales promotion
  • 9.8 Summary

• 10. E-commerce and direct marketing

  • 10.1 Introduction
  • 10.2 Direct marketing
  • 10.3 Electronic commerce
    • 10.3.1 Successful e-commerce
  • 10.4 Online marketing
  • 10.5 Using customer databases
  • 10.6 Privacy issues
  • 10.7 Summary

• 11. Managing the service encounter

  • 11.1 Introduction
  • 11.2 Participants
    • 11.2.1 Customers
    • 11.2.2 Service personnel
  • 11.3 Managing the service encounter
    • 11.3.1 Role theory
    • 11.3.2 Script theory
  • 11.4 Process
    • 11.4.1 Operations management and services
    • 11.4.2 Manufacturing efficiency
    • 11.4.3 Improving services efficiency
    • 11.4.4 Matching supply and demand
  • 11.5 Physical evidence
    • 11.5.1 Types of physical evidence
    • 11.5.2 Space demarcation
    • 11.5.3 Atmospherics
    • 11.5.4 Servicescapes
  • 11.6 Summary

• 12. Customer relationship management

  • 12.1 Introduction
  • 12.2 Customer relationship management
  • 12.3 Customer satisfaction
    • 12.3.1 Benefits of customer satisfaction
  • 12.4 Service quality
    • 12.4.1 Conceptual model of service quality
    • 12.4.2 SERVQUAL
  • 12.5 Summary

7.5.3 The price setting process

There has been an implicit price-setting process covered in our discussion and reading on pricing decisions. We can pull it all together by identifying four basic steps in the process (although this number varies with different authors):

1. establish pricing goals
2. estimate demand, costs, and profits
3. choose a price strategy to help determine a base price
4. fine-tune the base price with pricing tactics.

Even though we have established and justified our pricing strategies, there comes a time when we may need to alter prices. The next reading discusses how we can react when competitors change prices and other reasons why an organisation should consider price cuts and increases. An additional reading is included to remind us that there are other factors besides price that may determine if customers do business with us, for example, customer service and quality.

In your text

Kotler et al. (2004) Chapter 13, pp. 518-522, 'Price changes', 'Steps to effective pricing' and 'Summary'.

Reading 7.4

Haines, G. 2002, 'Pricing from the customer's perspective', Marketing & eBusiness , May, pp. 34-36, 38-39, 41.

Overall, then, pricing turns out to be a complex rather than a simple decision. Table 7.4 summarises the importance of price as a component of the marketing mix by identifying the role pricing can play in achieving a variety of organisational objectives.

Table 7.4 Some organisational objectives and the role pricing can play in attaining them

Objectives mainly concerned with:	Pricing Steps Taken	Why Take Such Steps?
Income Achieve a target return on investment (ROI)	Identify price levels that will yield the required return on investment.	Firm may have a required return on investment and may drop product lines that cannot reach that return.
Maximize profits	Control costs and adjust prices to achieve profit maximization.	All companies would like to achieve profit maximization. Some come close to this goal, particularly for certain items in their product mixes.
Increase cash flow	Adjust prices and discounts to encourage purchases and rapid payment.	Company may face a serious cash flow problem and be unable to meet its obligations.
Survive/Keep a going concern	Adapt prices to permit the organization to 'hold on' in periods of business downturns or until a buyer can be found.	The organization may be seeking to last out an economic storm or simply to hold on for a few years. The organization may be for sale, and it is easier to sell a going concern than one that is out of business.
Sales Maintain market share	Assure that prices contribute to keeping sales in roughly the same position relative to those of competitors.	Many companies, such as Procter & Gamble in detergents, are long-time leaders and want to keep leadership positions.
Encourage sales growth	Adjust price and discounts to encourage more purchases by existing buyers and to attract new buyers.	The firm may need a larger group of customers to ensure growth.
Competition Meet competition	Set prices about equal to those of competitors. Do the same with discounts offered.	Many firms do this to avoid price competition and compete by means of non price competitive moves.
Avoid competition	Set prices at a level that will discourage competition in the firm's markets.	A firm with a local monopoly might choose to keep prices low so no new competitors will be attracted to its area.
Undercut competition	Set prices lower than the competitors.	The organization might undercut competition to project a bargain image or to draw customers away from competitors.
Social Concerns Behave ethically	Due to special considerations, set prices at levels lower than they could have been.	A manufacturer of prescription medicines could charge almost any price for effective drugs but 'does what's right', though this is partly to avoid government regulation.
Maintain employment	Set prices at levels that will maintain production and employment of workers.	An organization with strong community ties may seek to keep townspeople employed at least until a buyer for the company can be found.

Source: Zikmund and d'Amico (1995, p. 492)

We will now complete this chapter by examining pricing in a port environment. The article by Dowd and Fleming (1994) explains why pricing is important to ports, discusses port pricing strategies and works through the port pricing process. Even though this article is becoming dated, the ideas are not as it provides many useful examples and applications of what we have been discussing in a maritime perspective.

Reading 7.5

Dowd, T. J. and Fleming, D. K. 1994, 'Port pricing', Maritime Policy and Management , 21 (1), 29-35.

Consider this

Are there any other issues raised in this chapter that should have been discussed in the article by Dowd and Fleming (1994)?

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