Ch. 11: Pricing Strategies
Business 390 with Elton at Oregon State University
About this deck
By: Ben Bodenmiller
Textbook:
Principles of Marketing (13th Edition)
Created: 2012-05-17
Size: 36 flashcards
Views: 60
Textbook:
Principles of Marketing (13th Edition)Created: 2012-05-17
Size: 36 flashcards
Views: 60
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market-skimming pricing
strategy with high initial prices to "skim" revenue layers from the market
• Product quality and image must support the price
• Buyers must want the product at the price
• Costs of producing the product in small volume should not cancel the advantage of higher prices
• Competitors should not be able to enter the market easily
market-penetration pricing
low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share
• Price sensitive market
• Inverse relationship of production and distribution cost to sales growth
• Low prices must keep competition out of the market
product line pricing
takes into account the cost differences between products in the line, customer evaluation of their features, and competitors' prices
optional product pricing
takes into account optional or accessory products along with the main product
captive-product pricing
involves products that must be used along with the main product
- two-part pricing involves breaking the price into
- fixed fee
- variable usage feed
by-product pricing
products with little or no value produced as a result of the main product. producers will seek little or no profit other the the cost to cover storage and delivery
product bundle pricing
combines several products at a reduced price
pricing strategies (list)
- market-skimming pricing
- market-penetration pricing
- product line pricing
- optional-product pricing
- captive-product pricing
- by-project pricing
- product bundle pricing
price-adjustment strategies (list)
- discount and allowance pricing
- segmented pricing
- psychological pricing
- promotional pricing
- geographic pricing
- dynamic pricing
- international pricing
discount and allowance pricing
reduces prices to reward customer responses such as paying early or promoting the product
segmented pricing
used when a company sells a product at two or more prices even though the difference is not based on cost
psychological pricing
occurs when sellers consider the psychology (study of human mind) of prices and not simply the economics
promotional pricing
when prices are temporarily priced below list price or cost to increase demand
• Loss leaders
• Special event pricing
• Cash rebates
• Low-interest financing
• Longer warrantees
• Free maintenance
risk of promotional pricing
- used too frequently, and copies by competitors can create "deal-prone" customers who will wait for promotions and avoid buying at regular price
- creates price wars
geographic pricing
used for customers in different parts of the country or world
• FOB pricing
• Uniformed-delivery pricing
• Zone pricing
• Basing-point pricing
• Freight-absorption pricing
FOB (free on board) pricing
means that the goods are delivered to the carrier and the title and responsibility passes to the customer
uniformed delivery pricing
means the company charges the same price plus freight to all customers, regardless of location
zone pricing
means that the company sets up two or more zones where customers within a given zone pay a single total price
basing point pricing
means that a seller selects a given city as a "basing point" and charges all customers the freight cost associated from that city to the customer location, regardless of the city from which the goods are actually shipped
freight absorption pricing
means the seller absorbs all or part of the actual freight charge as an incentive to attract business in competitive markets
dynamic pricing
when prices are adjusted continually to meet the characteristics and needs of the individual customer and situations
international pricing
when prices are set in a specific country based on country-specific factors
• Economic conditions
• Competitive conditions
• Laws and regulations
• Infrastructure
• Company marketing objective
price cuts occur due to
- excess capacity
- increased market share
increased market share results in
price cuts
excess capacity results in
price cuts
prices increase from
- cost inflation
- increased demand
- lack of supply
price increases (buyer reactions)
- product is "hot"
- company greed
price cuts (buyer reactions)
- new models will be available
- modes are not selling well
- quality issues
price fixing
illegal agreement of price setting between two or more sellers. sellers must set prices without talking to competitors.
predatory pricing
selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business
Robinson Patman Act
prevents unfair price discrimination by ensuring that the seller offer the same price terms to customers at a given level of trade
• Price discrimination is allowed:
– If the seller can prove that costs differ when selling to different retailers
– If the seller manufactures different qualities of the same product for different retailers
retail (resale) price maintenance
when a manufacturer requires a sealer to charge a specific retail price for its products
deceptive pricing
occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers
prices are sticky because...
of "cost to print new menus"
technology allows for ___ pricing
dynamic
cost to print new menus results in ____ pricing
sticky
About this deck
By: Ben Bodenmiller
Textbook: Principles of Marketing (13th Edition)
Created: 2012-05-17
Size: 36 flashcards
Views: 60
Textbook:
Principles of Marketing (13th Edition)Created: 2012-05-17
Size: 36 flashcards
Views: 60
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“Simply amazing. The flash cards are smooth, there are many different types of studying tools, and there is a great search engine. I praise you on the awesomeness.”
Dennis
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