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28 Cards in this Set
- Front
- Back
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new product pricing strategies |
market-skimming pricing, market penetration pricing |
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how does market-skimming pricing work |
setting a high price for new product to skim maximum revenues layer by layer from segments best for new electronic products |
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how does market-penetration pricing work |
setting a low price for new product in order to attract large number of buyers and large market share |
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what are the product mix pricing strategies |
product line pricing, optional-product pricing, captive-product pricing, by-product pricing, product bundle pricing |
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what is product line pricing |
setting price steps between product line items (price points, common for hotels) |
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how does optional-product pricing work |
pricing optional or accessory products sold with the main product supplemental software, digital cameras, printers sold with new PCs |
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how does captive product pricing work |
pricing products that must be used with the main product - high margins often set for supplies services: two part pricing strategy fixed fee plus variable usage rate |
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by product pricing |
pricing of low-value by-products to get rid of them |
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product bundle pricing strategy |
pricing bundles of product sold together common in fast food industry |
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price adjustment strategies |
discount/allowance, segmented strategies, psychological, promotional, geographical, international |
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discount/allowance strategies |
types of discounts: cash, quantity, functional (trade), seasonal allowances: trade-in, promotional |
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types of segmented pricing strategies |
customer, product-form, location, time certain conditions must exist for segmented pricing to be effective |
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psychological price adjustment strategies |
the price is used to say something about the product: price-quality relationship references prices numeric digits may have symbolic and visual qualities that psychologically influence buyers |
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promotional price strategies |
temporarily prices product below list or even cost price loss leaders: special event pricing, cash rebates, low interest financing, longer warranties, free maintenance can have adverse effects |
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types of geographical pricing strategies |
FOB-origin, uniform delivered, zone, basing point, freight absorption |
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FOB origin vs uniform delivered |
FOB origin: customer pays the freight from factory to destination uniform delivered: company charges same price plus freight to all customers regardless of location. freight charge is set at average freight cost |
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what is zone pricing and basing point pricing |
zone pricing: falls between FOB and uniform delivered. company sets up 2 or more zones, all customers within a zone pay a single total price, the further the zone, the higher the price basing point: company chooses a city as "basing point", charges all customers freight cost from city to location, regardless where goods are shipped from |
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freight-absorption pricing |
anxious to do business, might absorb all or part of freight charges |
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international price adjustment strategies |
prices charged in specific country depend on: economic conditions competitive situation laws/regulations distribution system consumer perceptions cost considerations |
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when to initiate price cuts? |
excess capacity, faces falling market share due to price competition desire to be market share leader |
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when to increase prices? |
can increase profit
faces cost inflation greater demand than supply |
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how to increase prices? |
eliminating discounts, adding higher-priced units to product line |
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alternatives to increasing price? |
reducing product size, using less expensive materials, unbundling the product |
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when are competitors more likely to react to price changes? |
number of firms is small, product is uniform, buyers are well informed |
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when to respond to price changes? |
market share/profits will be negatively affected if nothing is changed |
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actions taken to respond to price changes |
reducing price, raising perceived quality, improving quality and increasing price, launching low price "fighting brand" |
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public policy with regards to pricing within channel levels |
price fixing: cannot work with each other to set prices predatory pricing: cannot sell below cost with intention of punishing competitor or gaining higher long run profits or ousting competitors |
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public policy with regards to pricing across channel levels |
price discrimination, retail price maintenance, deceptive pricing (bogus reference, comparison pricing, scanner fraud, price confusion) |
