Application 6A - 6B pg. 17 - 19 Flashcards
Define pricing strategies
pricing strategies manipulate the prices of products to attract new customers
Define non-pricing strategies
non-pricing strategies use different methods without changing the price
Describe how non-pricing strategies are used
> when competition is limited, non-pricing strategies are usually more efficient
examples: advertising, using extended warranties, extending store hours, and expanding services
Describe how pricing strategies are used
> For smaller businesses, pricing strategies work better by manipulating prices to appeal to customers
don’t work when there are limited number of competitors
examples: membership discounting, bundle pricing, geographic pricing, and penetration pricing
Describe membership pricing
Membership pricing involves inducing customers to join a “club” of consumers.
>club has access to reduced prices and services for those who shop regularly at store
>lower prices are incentive to return and buy more
>membership fees for joining club generate income and are incentive to bring customers back to store
Describe bundle pricing
Bundle pricing is selling multiple items together in one package for a lower price than if the products were sold separately.
>used to get rid of excess surplus to avoid taking loss on items
>lower price induces customer to buy at lower price and move less marketable items
Describe geographic pricing
Geographic pricing is used by companies with outlets in different states or countries.
>to penetrate market, company may significantly lower price of its products to get attention of consumer
Describe natural monopoly
> occurs when single firm fills need for a good or service rather than multiple firms
eliminates need to run multiple water, power, gas, and cable TV lines throughout city
have no competition within their operating area
