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Carbon Management

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Chapter 10

1 Introduction

Pricing
Els Gijsbrechts and Katia Campo Objectives
This chapter does not have as its aim the provision of ready-made methods for the assessment of price levels. Its objectives are: 1 to indicate the importance and complexity of price decisions for marketing managers; 2 to consider what is a ‘price’; 3 to identify the factors internal to the firm that influence price decisions; 4 to identify the factors external to the firm that influence price decisions; 5 to discuss pricing strategies and tactics.

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onsider a Belgian couple contemplating a shopping trip to London during the Christmas period. The cheapest way to cross the Channel would be to take a ticket on the ferry from Oostende to Ramsgate, which would amount to about Bfr. 1,500 per person. While they can afford this from a budgetary viewpoint, taking the boat would mean spending about five hours travelling, which would mean losing almost half of the ‘available’ weekend to hunt for interesting bargains in the London shopping area. Taking the plane would drastically reduce travelling time, but the air fare of Bfr. 4,900 per person is not overly appealing. Friends recommend that they buy a combined ticket from the Belgian Railways and the Channel (regular price: Bfr. 3,465 per person). This seems to be the most interesting option, but unfortunately no more regular tickets are available for the morning of the Christmas weekend. The price of a first classRailway/Channel ticket (Bfr. 6,960 per person, including a luxury meal and free drinks) is prohibitive. Ultimately, the couple decides to travel by Hovercraft, at a rate of Bfr. 2,200 per person. This example illustrates the complexity of consumer choices in the face of a variety of alternatives offered at different prices. The mirror image of this problem is the pricing issue for firms offering the products or services to various

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