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Pricing Man
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COST CONSTRAINTS
1. TYPES OF COSTS
TOTAL COST - TC
FIXED COST - FC
VARIABLE COST - VC
MARGINAL COST - MC
COST CONSTRAINTS
2. Cost - Volume Relationship
Economies of Scale
Learning effect / Curve
COST CONSTRAINTS
3. Competitors Cost & Prices
Always compare to competitors
PRICE OBJECTIVES
Profit Orientated
Sales Volume
Other
PRICE OBJECTIVES
Profit-orientated
Maximum Profit
Satisfactory Profit
Target profit (ROI)
Profit on each product item
PRICE OBJECTIVES
Sales Volume
Maintain or Increase Market Share
Maintain of Increase Sales Volume
PRICE OBJECTIVES
Other
1. To stabalise prices in industry
2. Avoid price competition
3. Prevent competitve action
4. Survive
5. Serve a social purpose
COST-BASED PRICING
Cost-plus pricing
Cost-plus-percentage of cost pricing
Cost-plus fixed-fee pricing
Experience Curve
Breakeven anaylsis
PROFIT-BASED PRICING
Target Profits
Target Return on Sales
ROI
DEMAND-BASED PRICING
Value Based
Demand-backward
Prestige
Odd-even
Price Lining
Traditional
Bundle
NEW-PRODUCT PRICING
Higher than Competitors = Skimming
Lower than Competitors = Penetration
Mid Range
Competition-Orientated Methods
Customary Pricing
Loss-Leader
Sealed Bid
TACTICAL PRICING DESICIONS
DISCOUNTS
Trade or Functional Discounts
Quantity Discounts
Cash Discounts
Seasonal Discounts
DISCOUNTS
Trade/Funcitional
Factors in determining size
Existing Trade Discounts
Expectation of intermediaries
Relation of trade discount to services rendered
Operating cost of midman
Costs of marketing to midman
TD's by competitors to midman
Intensity of distribution
Turnover of midmans
Negotiating abilites of midman
DISCOUNTS
Quantity discount kinds
Noncumulative
Cumulative
Minimum order
GEOGRAPHICAL PRICING
Free-on-Rail
Freight-Absorbtion
Uniform Regional Pricing
Base-Point pricing (Adv&Disadv)
Managing Price Changes
Initiating Price Cuts
Inititaing Price Increase
Buyers reactions to price changes
Competitors reaction to price changes
Responding to competitors price changes
Responding to Competitor Price Changes
Questions to ask
Why price change?
2 gain market share or use up excess capacity?
2 meet changing cost conditions or create price change in whole industry?
Is it permanent or temp?
Are other organisations responding?
Responding to Competitor Price Changes
Response
Reduce Price to match
Decide market price is to sensitive
Realise the difficulty in recapturing lost market share
Maintain price - raise perceived quality
Increase Price and Quality
Low price launch of fighting brand
SEGMENTED PRICING
Customer Segmented Pricing
Product Form Pricing
Location Pricing
Time Pricing
OTHER PRICING
Psychological Pricing
- perceived quality
- Reference
- Odd-even
International Pricing
Internet Pricing
(adv)
Promotional Pricing
Value Pricing
Internet Pricing adv
Facilitate buyers acquisition of quality info for various goods
Enables suppliers to update prices in response to observed demand
Allows meaning market of potential buyers with price being outcom eof an auction process
Permits prospective buyer to specify detail
Author
Calime
ID
19200
Card Set
Pricing Man
Description
MNM3036
Updated
2010-05-13T19:22:34Z
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