At- Marketing Unit 7

Front 1

PRICING STRATEGIES

Back 1

• Market-Skimming Pricing

• Market- Penetration Pricing

Front 2

Is a strategy with high initial prices to “skim” revenue layers from the market

Back 2

MARKET-SKIMMING PRICING

Front 3

Market-penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share

Back 3

MARKET PENETRATION PRICING

Front 4

•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

Back 4

MARKET SKIMMING PRICING

Front 5

• Price sensitive market

• Inverse relationship of production and distribution cost to sales growth

• Low prices must keep competition out of the market

Back 5

MARKET PENETRATION PRICING

Front 6

Takes into account the cost differences between products in the line, customer evaluation of their features, and competitors’ prices

Back 6

PRODUCT-LINE PRICING

Front 7

Takes into account optional or accessory products along with the main product

Back 7

OPTIONAL PRODUCT PRICING

Front 8

Involves products that must be used along with the main product

Back 8

CAPTIVE-PRODUCT PRICING

Front 9

T/F

Producers of main products that apply Captive-product pricing often set them high and place low markups on the supplies.

Back 9

FALSE

Front 10

Also known as two-part pricing:

fixed fee + variable usage rate

Back 10

CAPTIVE-PRODUCT PRICING

Front 11

Refers to products with little or no value produced as a result of the main product. Producers will seek little or no profit other than the cost to cover storage and delivery.

Back 11

BY-PRODUCT PRICING

Front 12

Combines several products at a reduced price.

It can promote the sales of products customers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle.

Back 12

PRICE BUNDLE PRICING

Front 13

PRICE-ADJUSTMENT STRATEGIES

Back 13

• Discount and Allowance Pricing

• Segmented pricing

Front 14

Reduces prices to reward customer responses such as paying early or promoting the product

Back 14

DISCOUNT AND ALLOWANCE PRICING

Front 15

Is used when a company sells a product at two or more prices even though the difference is not based on cost

Back 15

SEGMENTED PRICING

Front 16

Three types of segmented pricing

Back 16

• CUSTOMER SEGMENT PRICING

• PRODUCT FORM SEGMENT PRICING

• LOCATION PRICING

Front 17

when different customers pay different prices for the same product or service.

Back 17

CUSTOMER SEGMENT PRICING

Front 18

when different versions of the product are priced differently but not according to differences in cost.

Back 18

PRODUCT FORM SEGMENT PRICING

Front 19

– Noting current prices – Remembering past prices – Assessing the buying situations

Back 19

REFERENCE PRICES

Front 20

When the product sold in different geographic areas is price differently even though the cost is the same

Back 20

LOCATION PRICNG

Front 21

Occurs when sellers consider the psychology of prices and not simply the economics

Back 21

PSYCHOLOGICAL PRICING

Front 22

Are prices that buyers carry in their minds and refer to when looking at a given product

Back 22

REFERENCE PRICES

Front 23

is when prices are temporarily priced below list price or cost to increase demand

Back 23

PROMOTIONAL PRICING

Front 24

are products sold below cost to attract customers in the hope they will buy other items at normal markups.

Back 24

LOSS LEADERS

Front 25

is used to attract customers during certain seasons or periods.

Back 25

SPECIAL EVENT PRICING

Front 26

are given to consumers who buy products within a specified time.

Back 26

CASH REBATES

Front 27

T/F

Low-interest financing, longer warrantees, and free maintenance lower the consumer’s “total price."

Back 27

TRUE

Front 28

Risks of promotional pricing

Back 28

•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

Front 29

is used for customers in different parts of the country or the world

Back 29

GEOGRAPHICAL PRICING

Front 30

means that the goods are delivered to the carrier and the title and responsibility passes to the customer

Back 30

FOB ORIGIN PRICING

Front 31

means the company charges the same price plus freight to all customers, regardless of location

Back 31

UNIFORMED DELIVERED PRICING

Front 32

T/F

FOB – the downside is the closer the customer, the higher the cost.

Back 32

FALSE

Front 33

means that the company sets up two or more zones where customers within a given zone pay a single total price

Back 33

ZONE PRICING

Front 34

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

Back 34

BASING-POINT PRICING

Front 35

means the seller absorbs all or part of the actual freight charge as an incentive to attract business in competitive markets

Back 35

FREIGHT ABSORPTION PRICING

Front 36

Is when prices are adjusted continually to meet the characteristics and needs of the individual customer and situations

Back 36

DYNAMIC PRICING

Front 37

is when prices are set in a specific country based on country-specific factors

Back 37

INTERNATIONAL PRICING

Front 38

Sellers must set prices without talking to competitors

Back 38

PRICE FIXING

Front 39

Selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business

Back 39

PREDATORY PRICING

Front 40

is when a manufacturer requires a dealer to charge a specific retail price for its products

Back 40

RETAIL OR RESALE PRICE MAINTENANCE

Front 41

Occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers

Back 41

DECEPTIVE PRICING