11. Pricing Products: Pricing Strategies Flashcards
Setting a low price for a new product to attract a large number of buyers and a large market share
Market-penetration pricing
Setting a high price for a new product to skim maximum revenues layer by later from the segments willing to pay the high price; the company makes fewer but more profitable sales
Market-skimming pricing (or price skimming)
Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features and competitors’ prices
Product line pricing
The pricing of optional or accessory products along with a main product
Optional-product pricing
Setting a price for products that must be used along with a main product, such as blades for razors and cartridges for printers
Captive-product pricing
Setting a price for by-products to make the main product’s price more competitive
By-product pricing
Combining several products and offering the bundle at a reduced price
Product bundle pricing
Discount and allowance pricing Segmented pricing Psychological pricing Promotional pricing Geographical pricing Dynamic pricing International pricing
Price-adjustment strategies
Adjusting their basic price to reward customers for certain responses such as early payment of bills, volume purchases and off-season buying
Discount and allowance pricing
A straight reduction in price on ourchases during a stated period if time
Discount
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way
Allowance
Selling a product or service at two or more prices, where the difference in prices is not based in differences in costs
Segmented pricing
A pricing approach that considers the psychology if prices and not simply the economics; the price is used to say something about the product
Psychological pricing
Prices that buyers carry in their minds to and refer to when they look at a given product
Reference prices
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales
Promotional pricing