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15 Cards in this Set
- Front
- Back
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2 New-product Pricing Strategies
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1. Market Skimming
2. Market Penetration |
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Market Skimming Pricing
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strategy with high initial prices to "skim" revenue layers from market;
product quality/image must support price, buyers must want product, competitors should not able to enter market easily |
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Market Penetration Pricing
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sets low initial price in order to penetrate market quickly and deeply attract large number of buyers quickly to gain market share;
price sensitive market, inverse relationship of production/distribution cost to sales growth, low prices must keep competition out of market |
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5 Product Mix Pricing Strategies
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1. Product-line Pricing
2. Optional-product Pricing 3. Captive-product Pricing 4. By-product Pricing 5. Product Bundle Pricing |
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Product-line Pricing
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takes into account cost difference between products in the line, customer evaluation of their features, and competitors' prices
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Optional-product Pricing
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takes into account optional or accessory products along with main product
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Captive-product Pricing
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involves products that must be used along with the main product;
two-part pricing breaks fee into fixed and variable |
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By-product Pricing
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refers to products with little or no value produced as result of main product; producers seek little or no more profit other than to cover costs
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Product Bundle Pricing
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combines several products at reduced price
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7 Price-Adjustment Strategies
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1. Discount and allowance pricing
2. Segmented pricing 3. Psychological pricing 4. Promotional pricing 5. Geographical pricing 6. Dynamic pricing 7. International pricing |
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Discount/Allowance Pricing
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reduces prices to reward customer responses such as paying early or promoting the product
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Segmented Pricing
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when a company sells a product at two or more prices even though the difference is not based on cost;
Customer-segment pricing, Product form segment pricing, location pricing |
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Psychological Pricing
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when sellers consider the psychology of prices and not simply the economics
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Promotional Pricing
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when prices are temporarily priced below list price or cost to increase demand;
loss leaders, rebates, special events, low-interest financing |
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Reference Prices
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prices that buyers carry in their minds and refer to when they look at a given product
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