MGKT Chpt 20 Setting the Right Price

  1. How to Set a Price on a Product or Service
    • Establish pricing goals\
    • Estimate demand, costs, and profits
    • Choose a price strategy
    • Fine tune with pricing tactics
    • Results lead to the right price
  2. Price Strategy
    A basic, long-term pricing framework, which establishes the initial price for a product and the intended direction for price movements over the product life cycle.
  3. Price Skimming
    A firm charges a high introductory price, often coupled with heavy promotion.
  4. Penetration Pricing
    A firm charges a relatively low price for a product initially as a way to reach the mass market.
  5. Status Quo Pricing
    Charging a price identical to or very close to the competition’s price.
  6. Situations When Price Skimming Is Successful
    • Inelastic Demand
    • Unique Advantages/Superior
    • Legal Protection of Product
    • Technological Breakthrough
    • Blocked Entry to Competitors
  7. Unfair Trade Practices
    Laws that prohibit wholesalers and retailers from selling below cost.
  8. Price Fixing
    An agreement between two or more firms on the price they will charge for a product.
  9. Predatory Pricing
    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.
  10. Value-Based Pricing
    Setting the price at a level that seems to the customer to be a good price compared to the prices of other options.
  11. FOB Origin Pricing
    The buyer absorbs the freight costs from the shipping point (“free on board”).
  12. Uniform Delivered Pricing
    The seller pays the freight charges and bills the purchaser an identical, flat freight charge.
  13. Zone Pricing
    The U.S. is divided into zones, and a flat freight rate is charged to customers in a given zone.
  14. Freight Absorption Pricing
    The seller pays for all or part of the freight charges and does not pass them on to the buyer.
  15. Basing-Point Pricing
    The seller designates a location as a basing point and charges all buyers the freight costs from that point.
  16. Product Line Pricing
    Setting prices for an entire line of products.
  17. Joint Costs
    Costs that are shared in the manufacturing and marketing of several products in a product line.
  18. Tacitics to use duringHigh Inflation
    • Cost-Oriented Tactics
    • Demad-Oriented Tactics
  19. Price Shading
    The use of discounts by salespeople to increase demand for one or more products in a line.
  20. List some Strategies to Make Demand More Inelastic
    • Cultivate selected demand
    • Create unique offerings
    • Change the package design
    • Heighten buyer dependence
  21. List Supplier Strategies during Recession
    • Renegotiating contracts
    • Offering help
    • Keeping the pressure on
    • Paring down suppliers
  22. Base Price
    the general price level at which the company expects to sell the good or service
  23. quantity discount
    a price reduction offered to buyers buying in multiple units or above a specified dollar amount
  24. cumulative quantity discount
    a deduction form list price that applies to the buyers total purchases made during a specific period
  25. noncumulative quantity discount
    a deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period
  26. cash discount
    a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill
  27. functional discount (trade discount)
    a discount to wholesalers and retailers for performing channel functions
  28. seasonal discount
    a price reduction for buying merchandise out of season
  29. promotional allowance (trade allowance)
    a payment to a dealer for promoting the manufacture's product
  30. rebate
    a cash refund given for the purchase of a product during a specific period
  31. single-price tactic
    a price tactic that offers all goods and services at the same price (or perhaps two or three prices)
  32. flexible pricing (variable pricing)
    a price tactic in which different customers pay differnt prices for essentially thes ame merchandise bought in equal quantities
  33. price lining
    the pratice of offering a product line with several items at specific price points
  34. leader pricing (loss-leader pricing)
    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
  35. bait pricing
    a price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise
  36. odd-even pricing (psychological pricing)
    a price tactic that uses odd-numbered prices to connote bargins and even-numbered numbers to imply quality
  37. price bundling
    marketing two or more products in a single package for a special price
  38. unbundling
    reducing the bundle of services that comes with the basic product
  39. two-part pricing
    a price tactic that charges two separate amounts to consume a single good or service
  40. consumer penalty
    an extra fee paid by the consumer for violating the terms of the purchase agreement
  41. delayed quotation 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
  42. escalator pricing
    a price tactic in which the final selling price reflects cost increases incured between the time the order is placed and the tiem delivery is made
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MGKT Chpt 20 Setting the Right Price
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