Marketing Chapter 14

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)

setting the highest initial price that customers really desiring the product are wiling to pay (new product)

setting a low initial price on a new product to appeal immediately to the mall market (opposite of skimming)

setting a high price so that quality or status-conscious consumers will be attracted to the product and buy it

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

setting prices a few dollars or cents under an even number ($499.99)

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

the marketing of two or more products in a single package price

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

standard markup, cost-plus pricing, experience curve pricing

adding a fixed percentage to the cost of all items in a specific product class

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

a fixed percentage is added to the total unit cost

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

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

target profit pricing, target return on sales pricing, target return on investment pricing

a firm may set an annual target of a specific dollar profit

to set a typical prices that will give them a profit that is a specified percentage

a method of setting prices to achieve this target

customary pricing, above at or below market pricing, loss-leader pricing

some products where tradition, a standardized channel of distribution, or other competitive factors dictate the price

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

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

set the list or quoted price

fixed pricing- setting one price for all buyers of a product or service

dynamic pricing setting different prices for products and services depending on individual buyers and purchase situations

setting of prices for all items in a product line, determine the lowest-prices and highest

involves successive price cutting by competitors to increase or maintain their unit sales or market share

make special adjustments to the list or quoted price

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

reductions in unit costs for a larger order

accumulation of purchases of a product over a given time period (typically a year)

based on the size of an individual purchase order (large orders, not series)

encourages buyers to stick inventory earlier than their normal demand would require

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

to encourage retailers to pay their bills quickly

reductions from list or quoted prices to buyers for performing some activity

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

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