mktg chp10

  1. price is the amount of money charged for a product or service.
    Price (Narrow Definition)
  2. price is the sum of all the values that consumers exchange for the benefits of having or using the product or service.
    Price (Broad Definition)
  3. charging different prices depending on individual customers and situations. Website like e-bay allows negotiation when it comes to pricing.
    Price (Dynamic Pricing)
  4. Pricing Best Practices
    • Develop a unique pricing mentality.
    • Consistently deliver more value.
    • Price strategically, not opportunistically.
    • Know your competition.
    • Make pricing a process
  5. Pricing Decision Factors
    • Internal Factors
    • External Factors
  6. Pricing Decision Factors - Internal Factors
    • Marketing objectives.
    • Marketing mix.
    • Costs.
    • Organization style.
    • Target market.
    • Positioning objectives
  7. Pricing Decision Factors - External Factors
    • Nature of the market.
    • Demand
    • Competitor.
    • Economic state.
    • Reseller needs.
    • Government actions.
    • Social concerns
  8. Pricing in Different Markets
    • Pure competition.
    • Monopolistic competition.
    • Oligopolistic competition.
    • Pure monopoly.
  9. Many buyers and sellers where each has little effect on the going market price
    Pure competition.
  10. Many buyers and sellers who trade over a range of prices
    Monopolistic competition.
  11. Few sellers and sensitive to each other’s pricing/marketing strategies
    Oligopolistic competition.
  12. Market consists of a single seller
    Pure monopoly.
  13. The relationship between price changes and the number of units sold
  14. A way of measuring how sensitive the market is to price changes.
  15. Elasticity.
    • Inelastic
    • Elastic
  16. minimal change in demand as price increases.
  17. significant drop in demand as price increases.
  18. General Pricing Approaches
    • Cost-based approach.
    • Value-based approach.
    • Competition-based approach.
  19. Cost-based approach.
    • Cost-plus pricing (cost of product + markup).
    • Break-even analysis
  20. Consumer perceptions of value.
    Value-based approach.
  21. What competitors are charging.
    Competition-based approach.
  22. Pricing New Products
    • Skimming pricing.
    • Penetration pricing.
  23. High price to reap maximum profit from early adopter segments.
    Skimming pricing.
  24. Can encourage competition.
    Skimming pricing.
  25. Products must be unique and hard to copy.
    Skimming pricing.
  26. Low price to gain maximum market share.
    Penetration pricing.
  27. May discourage competition.
    Penetration pricing.
  28. Used when the product is easily copied.
    Penetration pricing.
  29. Product Mix Pricing Strategies
    • Product Line.
    • Optional-product.
    • Product bundle pricing.
    • Captive-product.
    • By-product pricing.
  30. Involves setting price steps between various products in a product line
    Product Line.
  31. Pricing optional or accessory products sold with the main product (e.g., ice maker with the refrigerator).
  32. Combining several products and offering the bundle at a reduced price (e.g., computer with software and Internet access)
    Product bundle pricing.
  33. Pricing products that must be used with the main product (e.g., replacement cartridges for Gillette razors).
  34. Setting a price for by-products in order to make the main product’s price more competitive (e.g., sawdust and buttermilk).
    By-product pricing.
  35. Price-Adjustment Strategies
    • Discount and allowance pricing.
    • Segmented pricing.
    • Psychological pricing.
    • Promotional pricing.
    • Geographical pricing.
    • International pricing.
  36. a straight reduction based on: Cash, Quantity, Function, Season.
  37. promotional money paid by manufacturer to retailer.
  38. Discount - a straight reduction based on:
    • Cash. (save 2 pesos)
    • Quantity. (plus 20ml free)
    • Function. (with fabcon)
    • Season. (discount based on season)
  39. Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
    Segmented Pricing
  40. Segmented Pricing
    • Customer-segment.
    • Product-form.
    • Location pricing.
    • Time pricing.
  41. Consumers usually perceive higher-priced products as having higher quality.
    Psychological Pricing
  42. Consumers use price less when they can judge quality of a product.
    Psychological Pricing
  43. Promotional pricing approaches.
    • Special event pricing.
    • Low-interest financing.-
    • Longer warranties.
    • Free maintenance.
    • Discounts.
    • Cash rebates
  44. Price based on the following:
    Zone pricing.
    Freight-absorption pricing.
    Geographical Pricing
  45. Geographical Pricing
    • Price based on the following:
    • Zone pricing.
    • Freight-absorption pricing.
  46. Price depends on many factors, including:
    Economic conditions.
    Competitive situations.
    Laws and regulations.
    International Pricing
  47. International Pricing
    • Price depends on many factors, including:
    • Economic conditions.
    • Competitive situations.
    • Laws and regulations.
    • Costs.
  48. Initiating Price Changes
    • Price Cuts
    • Price Increases
  49. Price Cuts
    • Excess capacity.
    • Falling market share.
    • Dominate market through lower costs.
  50. Price Increases
    • Cost inflation.
    • Over-demand.
    • Cannot supply all customers’ needs.
  51. When a competitor lowers prices:
    • Reduce price to match the competitors’ price.
    • Maintain price but increase the perceived value of the offer.
    • Improve quality and raise price.
    • Hold price and introduce a new brand at a higher price.
    • Hold price and introduce a new brand at a lower price (fighting brand).
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mktg chp10
for finals