Chapter 6 Flashcards
Pricing Strategy
is the amount that the customer pays for a product; it is the amount of money exchanged for something of value.
Price
It is the sum of values that consumers exchange for the benefit of having or using the product.
Price
It goes by several other names such as rent,professional fee, room rates, tuition, fees, etc.
Price
AN ACT PROVIDING PROTECTION TO CONSUMERS BY
STABILIZING THE PRICES OF BASIC NECESSITIES AND PRIME
COMMODITIES AND BY PRESCRIBING MEASURES AGAINST
UNDUE PRICE INCREASES DURING EMERGENCY SITUATIONS
AND LIKE OCCASIONS
REPUBLIC ACT NO.7581
also know as the PRICE ACT
May 27, 1992
The department, agency or office of the Government which has
jurisdiction over a basic necessity or prime commodity.
IMPLEMENTING AGENCY
4 IMPLEMENTING AGENCY
Department of Agriculture,
Department of Health,
Department of Environment and Natural Resources,
Department of Trade and Industry,
with reference to agricultural crops, fish and other
marine products, fresh meat, fresh poultry and dairy products, fertilizers, and other
farm inputs;
Department of Agriculture,
, with reference to drugs;
Department of Health
with reference to wood
and other forest products;
Department of Environment and Natural Resources
, with reference to all other basic necessities
and prime commodities.
Department of Trade and Industry
ILLEGAL ACTS OF PRICE MANIPULATION
1.Hoarding
2.Profiteering
3.cartel
, which is the undue accumulation by a person or combination of persons of
any basic commodity beyond his or their normal inventory levels or the refusal to
dispose of any basic necessity of prime commodity to the general public or the
unjustified taking out of any basic necessity or prime commodity from the channels of
reproduction.
Hoarding
, which is the sale or offering for sale of any basic necessity or prime
commodity at a price grossly in excess of its true worth.
Profiteering
, which is any agreement between competing firms in the same industry
to
coordinate their actions to manipulate market outcomes such as prices, production
levels, or market shares.
Cartel
For 5 Points
Penalty for Acts of Illegal Price Manipulation - Any person who commits
any act of illegal price manipulation of any basic necessity or prime
commodity under —hereof shall suffer the penalty of
imprisonment for a period of not less than —-years nor more than
—— years, and shall be imposed a fine of not less than ———- nor more than ———
Section 5
five (5) years
Fifteen (15)
Five
thousand pesos (P5,000)
Two million pesos
(P2,000,000).
are ways by
which businesses offer goods and
services at the “right” price.
Pricing Strategy
is used when the goods and services are positioned to
luxurious and elegant. Having a higher price (compared to prevailing
market prices) projects the product is high-end and prestigious.
Example:
El Nido Resort caters a class A market, they have a Villa at
₱30,500 per night for maximum of 3 person
Prestige pricing
Employs when the market price is insensitive. This is an effective
short-term policy since competition can easily come in and provide
more supply.
Example:
Before: ₱125.00, Now: ₱100.00
MARKET SKIMMING PRICING
is used when setting a low initial selling
price to penetrate the market quickly and attract many buyers for a
large market share.
Example:
Tagaytay Country Hotel maintains relatively lower rates compared to
the more expensive Twin Lakes Hotel, which is also in Tagaytay. This
is a strategy to attract a wider segment of the market.
Market penetration pricing
is a strategy used to attract buyers to purchase
because of the reduced rate of the bundle compared to the total cost
of the items if purchased individually.
Example:
3 for ₱100
Burger, fries and drinks for ₱150
PRODUCT BUNDLING PRICING
are rates given to frequent or high-
volume users to attract them to purchase the products.
Example:
booking 10 rooms to earn one free
Special rates for long-staying guests
Volume discounts
This strategy addresses the seasonality aspect of the tourism
product. A price reduction is given to buyers who purchase services
out of season when the demand is lower or way ahead of time.
Example:
Piso fare
Merienda buffet for only ₱250.00 (2:00-5:00 PM)
DISCOUNT BASED ON
TIME OF PURCHASE
The company sells a product at two or more prices. The
difference in the price is not based on differences in cost
but instead tries to maximize the amount that each
customer pays.
Example:
Sold to a foreigner at $100.00, sold to a local resident
for only ₱2,000.00 only
DISCRIMINATORY PRICING
The use of ₱999 instead of ₱1,000 gives an impression that
the price is less than one thousand pesos when it actually is
just ₱1.00 less. In fact, the ₱1.00 is not of much value but it
makes a lot of differences in the mind of the buyer.
Example:
₱1,999
₱499
PSYCHOLOGICAL PRICING
