Marketing Chp 20

• establish pricing goals
• estimate demand, costs & profits
• choose a price strategy to help determine a base price
• fine-tune the base price with pricing tactics

a basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle

• a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion
• sometimes called a "market-plus" approach

• a pricing policy whereby a firm changes a relatively low price for a product initially as a way to reach the mass market
• means lower profit/unit
• typically discourages or blocks competition from entering a market

• charing a price identical to or very close to a competition's price
• advantage: simplicity
• disadvantage: may ignore demand or cost or both

• laws that prohibit wholesalers and retailers from selling below cost
• intent is to protect small local firms from giants like WalMart

• an agreement between two or more firms on the price they will charge for a product
• illegal under the Sherman Act & FTC Act

• Robinson-Patman Act of 1936
• prohibits any firm from selling to 2 or more different buyers, within a reasonably short time, commodities (not services) of like grade and quality at different prices

the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market

the general price level at which the company expects to sell teh good or service

a price reduction offered to buyers buying in multiple units or above a specified dollar amount

• a deduction from list price that applies to the buyer's total purchases made during a specific period
• intended to encourage customer loyalty

• a deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period
• intended to encourage orders in large quanities

a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill

a discount to wholesalers and retailers for performing channel functions

a price reduction for buying merchandise out of season

• a payment to a dealer for promoting the manufacturer's products
• both a pricing tool & promotional device

cash refund given for the purchase of a product during a specific period

settling the price at a level that seems to the customer to be a good price compared to the prices of other options

a price tactic that requires the buyer to absorb the freight costs from the shipping point.

• a price tactic in which teh seller pays the actual freight charges and bills every purchaser an identical, flat freight charge
• aka "postage stamp" pricing

• a modification of uniform delivered pricing that divides the US (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone
• best known is USPS parcel post rate structure

• a price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer
• a way to break into new market areas

a price tactic that charges freight from a given (basing) point, regardless of the city from which the goods are shipped

freight fees charged when none were actually incurred; declared illegal

a price tactic that offers all g/s at the same price (or perhaps 2 or 3 prices)

a price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities

the practice of offering a product line with several items at specific price points

a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store

a price tactic that tries to et consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise

a price tactic that uses odd-numbered prices to connote bargains and even-numbered price to imply quality

marketing two or more products in a single package for a special price

reducing the bundle of services that comes with the basic product

a price tactic that charges two separate amounts to consume a single g/s

an extra fee paid by the consumer for violating the terms of the purchase agreement

• suffer an irrevocable revenue loss
• incur significant additional transaction costs should customers be unable or unwilling to complete their purchase obligations

• setting prices for an entire line of products
• is trying to achieve maximum profits or other goals for the entire line rather than a single component of the line

• complementarys
• substitutes
• neutral

costs that are shared in teh manufacturing and marketing of several products in a product line

• culling products with a low profit margin
• delayed-quotation pricing
• escalator pricing

a price tactic used for industrial installations and many accessory items in which a firm price is not set until the item is either finished or delivered

• a price tactic in which the final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made
• often used only for extremely complex products that take a long time to produce

• a demand-oriented tactic during inflation
• the use of discounts by salespeople to increase demand for one or more products in a line

• cultivate selected demand
• create unique offerings
• change the package design
• heighten buyer dependence