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21 Cards in this Set
- Front
- Back
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what is price? |
rent, fee, rate, commission, assessment, tuition, fare, toll, premium, retainer, bribe, salary, wage, interest, tax |
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definition of price |
the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service |
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how does dynamic pricing on the web benefit sellers? |
charge lower prices, reap higher profits monitor customer behaviour, tailor offers change prices on the fly to adjust for changes in demand or costs negotiate prices in online auction and exchanges |
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how does dynamic pricing on the web benefit buyers? |
instant price comparisons from thousands of vendors find and negotiate lower prices negotiate prices in online auctions and exchanges |
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price as one factor in the marketing mix |
only element to produce revenues most flexible element can be changed quickly |
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what are the factors affecting price decisions |
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internal factors influencing price: marketing objectives |
market positioning influences strategy other pricing objectives: survival, current profit maximisation, market share leadership, product quality leadership not-for-profit objectives: partial or full cost recovery, social pricing |
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internal factors influencing price: marketing mix strategies |
pricing must be carefully coordinated with other marketing mix elements target costing is often used to support product positioning strategies based on price nonprice positioning can also be used |
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internal factors influencing price: costs |
types of costs: variable, fixed, total costs how costs vary at different production levels will influence price-setting |
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internal factors influencing price: organizational considerations |
who sets the price? - small companies: CEO or top management - large companies: divisional or product line managers price negotiation is common in industrial settings some industries have pricing departments |
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external factors influencing price: nature of market and demand |
types of market: pure competition, monopolistic competition, oligopolistic, pure monopoly consumer perceptions of price and value price-demand relationship: price elasticity of demand |
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external factors influencing price: competitors' costs, prices, and offers |
consider competitors' costs, prices and possible reactions when developing pricing strategy pricing strategy influences nature of competition: low price low margin inhibit competition, high price high margin attract competition benchmarking costs against competition is recommended |
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external factors influencing price: other environmental elements |
economic conditions affect production costs, buyer perceptions of price and value reseller reactions to price must be considered government may limit or restrict pricing options social considerations may be taken into account |
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major considerations in setting price |
product costs, competitors' prices and other internal and external factors, consumer perceptions of value |
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general pricing approaches |
cost-based pricing: cost-plus, breakeven analysis and target profit value-based pricing competition based pricing |
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cost-plus pricing details |
adding standard markup to cost ignores demand and competition popular pricing technique: simplifies pricing process, price competition may be minimized, perceived as fairer to both buyers and sellers |
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break-even analysis and target profit pricing |
break-even charts show total cost and total revenues at different levels of unit volume intersection of total revenue and total cost curves is the break-even point companies wishing to make a profit must exceed the break-even unit volume |
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cost based vs value based pricing (how to determine) |
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value based pricing approach |
uses buyer's perception of value rather than seller's costs to set price measuring perceived value can be difficult consumer attitudes toward price and quality has shifted during the last decade |
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benefits of value-based pricing |
can help B2B firms retain pricing power at retail level: everyday low pricing vs high-low pricing |
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competition based pricing |
aka going-rate pricing may be at the same level, above or below competition bidding for jobs also another variation (sealed bid pricing) |
