Marketing Chapter 14

  1. demand oriented pricing approaches (8)
    weigh factors underlying expected customer tastes and preferences more heavily than such factors as cost, profit and competition when selecting a price level (skimming, penetration, prestige, price lining, odd-even, target, bundle, yield management)
  2. Skimming Price
    setting the highest initial price that customers really desiring the product are wiling to pay (new product)
  3. penetration pricing
    setting a low initial price on a new product to appeal immediately to the mall market (opposite of skimming)
  4. prestige pricing
    setting a high price so that quality or status-conscious consumers will be attracted to the product and buy it
  5. price lining
    often a firm that is selling not just a single product but a line of products may price them at a number of different specific pricing points
  6. odd-even pricing
    setting prices a few dollars or cents under an even number ($499.99)
  7. target pricing
    estimate the price that the ultimate consumer would be willing to pay for a product then working backward through markups taken by retailers and wholesalers to determine what price they can charge wholesalers for the product
  8. bundle pricing
    the marketing of two or more products in a single package price
  9. yield management pricing
    charging of different prices to maximize revenue for a set amount of capacity at any given time (airlines, hotels, cruises) vary by time, day, week, season
  10. cost oriented pricing approaches (3)
    standard markup, cost-plus pricing, experience curve pricing
  11. standard markup pricing
    adding a fixed percentage to the cost of all items in a specific product class
  12. cost-plus pricing
    summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at price. two forms: cost-plus percentage-of-cost pricing and cost-plus fixed-free pricing
  13. cost-plus percentage-of-cost pricing
    a fixed percentage is added to the total unit cost
  14. cost-plus fixed-free pricing
    a supplier is reimbursed for all costs, regardless of what they turn out to be but is allowed only a fixed fee as profit that is independent of the final cost of the project
  15. experience curve pricing
    based on the learning effect, which holds that the unit cost for many products and services declines by 10% to 30% each time a firm's experience at producing and selling them doubles
  16. profit-oriented pricing approaches (3)
    target profit pricing, target return on sales pricing, target return on investment pricing
  17. target profit pricing
    a firm may set an annual target of a specific dollar profit
  18. target return on sales
    to set a typical prices that will give them a profit that is a specified percentage
  19. target return on investment
    a method of setting prices to achieve this target
  20. competition-oriented pricing approaches (3)
    customary pricing, above at or below market pricing, loss-leader pricing
  21. customary pricing
    some products where tradition, a standardized channel of distribution, or other competitive factors dictate the price
  22. above-at or below market pricing
    setting a market price for a product or product class based on subjective feel for the competitor's price or market price as the benchmark
  23. loss-leader pricing
    for a special promotion retail stores deliberately sell a product below its customary price to attract attention to it. will buy other products as well
  24. step 5
    set the list or quoted price
  25. one-price policy
    fixed pricing- setting one price for all buyers of a product or service
  26. flexible-price policy
    dynamic pricing setting different prices for products and services depending on individual buyers and purchase situations
  27. product line pricing
    setting of prices for all items in a product line, determine the lowest-prices and highest
  28. price war
    involves successive price cutting by competitors to increase or maintain their unit sales or market share
  29. step 6
    make special adjustments to the list or quoted price
  30. discounts
    reductions from the list price that seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller
  31. quantity discounts
    reductions in unit costs for a larger order
  32. cumulative discounts
    accumulation of purchases of a product over a given time period (typically a year)
  33. noncumulative
    based on the size of an individual purchase order (large orders, not series)
  34. seasonal discounts
    encourages buyers to stick inventory earlier than their normal demand would require
  35. trade (functional discounts)
    to reward wholesalers and retailers for marketing functions they will perform in the future - reductions off the list or base price are offered to resellers in the marketing channel
  36. cash discounts
    to encourage retailers to pay their bills quickly
  37. allowances
    reductions from list or quoted prices to buyers for performing some activity
  38. trade-in allowances
    a price reduction given when a used product is part of the payment on a new product-lower what the customer has to pay instead of lowering the price
  39. promotional alloances
    cash payments or extra amount of "free goods" awarded sellers and the channel of distribution for undertaking certain advertising or selling activities to promote a product
Card Set
Marketing Chapter 14
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