Chapter 14 Flashcards
Value
Ratio of bundle of benefits a customer receives from an offering compared to the costs he/she incurs by acquiring
Price
A monetary value and key determinant of perceived value
Pricing objectives
Desired or expected result associated w/ a pricing strategy
Elements of Pricing Decisions
Est. Pricing objectives, select pricing tactics, set exact price, determine channel discounts/allowances, execute price changes, understood legal considerations
Market share increase?
Penetration pricing, useful if consumers are price sensitive (cars)
Market entry at highest initial price point
Price skimming, useful for quality/prestige perceptions
Profit maximization price?
Target ROI
Value pricing
overtly attempts to take into account the role of price as it reflects the bundle of benefits sought/perceived by customer
Product Line Pricing
Price points based on the position of the offering within the product line. (First class vs. business class)
Complimentary pricing
Printers/Ink
Price Bundling
Cable Companies
Reference Pricing
MSRP vs. advertised price
Cost-Plus Pricing
Markup on cost, simplistic and cost allocation - can be difficult to accurately determine
Average-Cost Pricing
Total cost divided by forecast demand - then add desired profit margin
Discounts
Direct, immediate reductions in price provided to purchasers
Allowances
Remit monies to purchasers after the fact (rebates)
A change in price…
…can dramatically impact the effectiveness of the overall marketing mix variables in reflecting your offering’s positioning in the eyes of customers.
Deceptive Pricing
Bait and switch, car ads, same price, but fewer ounces?
Predatory Pricing
INTENT to push competitor out of market…below cost prices followed by new highs.
