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5 Cards in this Set
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Describe the major strategies for pricing new products |
Pricing is a dynamic process, pricing strategies usually change as the product passes through its life cycle. Introductory stage, sets prices for the first time. the company can decide on one of several strategies for pricing innovative new products. it can use market skimming pricing by setting high prices to skim the maximum amount of revenue from various segments of the market. Can use market penetrating pricing by setting a low price to penetrate the market and win a large market share. |
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explain how companies find a set of prices that maximizes the profits for the total product mix |
when the product is part of a product mix, the firm searches for a set of prices that will maximize the profits from the total mix. In product line pricing, the company determines the price steps for the entire product line it offers. In addition, the company must set prices for optional products, captive products, by-products and product bundles. |
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(4) discuss how companies adjust their prices to take into account different types of customers and situations |
Discount and allowance pricing, the company establishes cash, quantity, functional or seasonal discounts or carrying types of allowances. Segmented pricing, where the company sells a product at two or more prices to accommodate different customers, product forms, locations or times. Psychological pricing to better communicate a products intended position. In promotional pricing a company offers discounts or temporarily sells a product below list price as a special event. international pricing means that the company adjusts its price to meet different conditions and experiences in different world markets. |
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discuss the key issues related to initiating and responding to price changes |
when a firm considers initiating a price change, it must consider customers and competitors reactions. There are different implications to initiating price cuts and price increases. Buyer reactions to price changes are influenced by the meaning customers see in the price change. |
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overview the social and legal issues that affect pricing decisions. |
Many federal, state, and even local laws govern the rules of fair pricing. Also the companies must consider broader societal pricing concerns. The major public policy issues in pricing includes potentially damaging pricing practices within a given level of the channel, such a price fixing and predatory pricing. |
