Active learning ideas
Pricing is the only element of the marketing mix that generates revenue; the others are costs. This topic explores the strategies businesses use to set prices, including penetration pricing (low start), skimming (high start), and psychological pricing (e.g., $9.99). Students also learn the math behind marketing, specifically how to calculate the break-even point.
Activity 01
Groups are given the fixed and variable costs for a new lemonade stand. They must use a spreadsheet to find their break-even point at different price levels, deciding which price offers the best balance of volume and profit.
How do businesses determine the optimal price for a product?
Activity 02
Students look at a flyer from a Canadian retailer like Canadian Tire or Shoppers Drug Mart. They identify three different psychological pricing tactics used and discuss with a partner why those specific numbers were chosen.
What is the difference between price skimming and penetration pricing?
Activity 03
A new high-tech Canadian electric bike is launching. Half the class argues for a 'skimming' strategy to recover R&D costs, while the other half argues for 'penetration' to grab market share quickly. They must use market data to support their side.
How does psychological pricing influence consumer perception?
A few notes on teaching this unit
Watch Out for These Misconceptions
Price is just 'Cost + Profit.'
Students often ignore the 'value' side of the equation. Through 'willingness to pay' surveys in class, they learn that consumers don't care what it cost to make; they care what it's worth to them. This is the difference between cost-based and value-based pricing.
Lowering the price always increases sales.
Students may not realize that a low price can sometimes signal 'cheap' or 'low quality.' Using a 'brand perception' activity helps them see that for luxury goods, a lower price can actually decrease demand.
Methods used in this brief
Developing Marketing Objectives
Students learn to set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for a marketing campaign.
8 methodologies
Creating the Final Marketing Plan
Students compile their research, strategies, and promotional materials into a formal marketing plan presentation.
8 methodologies