ch 9 terms Flashcards
criteria of pricing
above costs and below consumer value perception
equilibrium
define consumer value based pricing
assess customer value perception, target price to match
define value based pricing
customer needs and perceptions influence cost and product design choices
define value based pricing
customer needs and perceptions influence cost and product design choices
define good value pricing
right combo of quality and service at cheap price
what is EDLP
Every day low pricing
define high-low pricing
mostly high costs, sometimes crazy sales
eg. evry jewels
define value added pricing
add features to justify higher price and stand out from competitors
define competition based pricing
use competition as point of reference
set price based on our value vs theirs
define cost based pricing
design, determine costs, convince buyers to pay that amount
define cost-plus pricing
overhead costs + promo and distribution + markup to make profit
define break even pricing
just want to make back costs
break even pricing equation
fixed costs/(unit price - unit variable cost)
define market skimming price
high price at release and lower over time
ex. tech
define market penetrating pricing
low cost to attract big chunk of market share
define fixed costs
don’t change based on number of units produced/sold
rent
define variable costs
change depending on # of units produced
(labour, materials)
2 internal factors considered in pricing
overall marketing strat, objectives, mix
organizational considerations: pricing teams
external factors of pricing MIDE
market
impact on other parties
demand
economy
define pure competition market
so many producers of one good that no one makes an impact
define monopolistic market
many buyers and sellers all with different prices because they’re all unique
define oligopolistic market
handful of big sellers
ex. internet
define pure monopoly market
one seller aka price maker
things to consider in market external factor
resellers reaction
govt influences
social concerns
what to consider in economy external factor
boom, recession, inflation, interest rate
5 product mix pricing starts
product line
optional product
captive/two-part
by-product
product bundle
define product line pricing
sells diff products in one line for different prices
define optional product pricing
added price for extra features on top of base model
ex. cars
define captive/two-part pricing
setting price for product that must be used with main one
ex. razors and blades
define by product pricing
sell by products/waste of production for additional profit
ex. fertilizer
define product bundle pricing
buy many things together for reduced rate per unit
ex. fast food combos
define quantity discount
large volume discount
define functional/trade discount
trade channel members get discounts
define seasonal discount
price reduction out of season
define trade in allowance
discount for trading old product in for new one
define promo allowance
rewards for dealers participating in add and sale support programs
define customer segment pricing
ex. same good cheaper for students and seniors
define product form pricing.
ex. economy vs business class flight ticket
define location based pricing
ex. concert tickets
define time based pricing
diff prices based on time of day/season
ex. bridge toll
define psychological pricing
higher price perceived to be high quality
define reference pricing
buyer carries in back of mind as reference
what are cash rebates
give some of buyers money back
ex. low interest financing, free maintenance, long warranty
define FOB origin pricing
make buyers further away pay more for shipping
define uniform-delivered pricing
same shipping fee for all
define zone pricing
zone A pays one price
zone B pays another
define basing point pricing
decide to calculate shipping cost as if all goods come from one warehouse
define freights absorption price
seller absorbs shipping costs
define dynamic pricing
constant change based on need and situation
ex. Uber
define international pricing
company sells in many countries and must match market conditions in each place
what initiates price cut
excess capacity
falling demand
trying to dominate market
what initiates price increase
higher costs
inflation
define fighter brand
we launch low price firm to compete with competition’s price change
define price fixing
illegal
law that sellers can’t commiserate with competitors for one united price
define bid rigging
competitors collude to decide winner of bid
illegal
define predatory pricing
sell at a loss to punish competitor or push out of business
illegal
define price discrimination
manufacturer changing price for different firms illegal
define functional discount
larger discount to wholesaler than retailer.
illegal in canada
define retail price maintenance
manufacturer requires dealer to charge certain price
illegal
define deceptive pricing
bait and switch customers with low quantity of severely discounted goods to make them buy higher one
illegal
