Deck 10 - Pricing - Lecture 11 Flashcards
what is price
price is a measure of value to both buyers and sellers
what is pricing
pricing is the management of price
what does price seeking mean
higher price = higher quality
what does price averse mean
lower price = greater value
what does cost represent
cost represents the total money, time and resources sacrificed to produce or acquire an offering
is the cost for the buyer just the price
the cost for the buyer can be greater than price (time spent researching etc)
what types of cost need to be factored in for the seller when pricing a product
fixed, variable and indirect costs
what does the product life cycle diagram look like
x time
y sales
starts convex in introduction then turns concave with point of inflection in growth stage then it peaks in maturity and goes down in decline
what are some different objectives a company can have
corporate objectives, marketing objectives, pricing objectives
what are the aims of pricing
profitability,
market share,
long term prosperity,
positioning
what are the different pricing strategies *
premium pricing,
penetration pricing,
economy pricing,
price skimming
what is premium pricing
price set to indicate distinctiveness of offering (higher quality)
what is penetration pricing
price set low relative to competition to gain market share
what is economy pricing
price set at bare minimum to attract price-sensitive customers
what is price skimming
price set high initially then lowered in steps
example of price skimming
video games
price set high initially then lowered in steps
what is price skimming the opposite of
price penetration (price set low relative to competition to gain market share), skimming (price set high initially then lowered in steps )
what is price penetration the opposite of
price skimming (price set high initially then lowered in steps), price penetration (price set low relative to competition to gain market share)
what are the pricing approaches *
cost-oriented approach,
demand-oriented approach,
competitor-oriented approach,
value-oriented approach
the pricing approaches (cost-oriented approach, demand-oriented approach, competitor-oriented approach, value-oriented approach) are not ________
distinctive
explain cost-oriented approach
cost of production + % markup = price
explain demand-oriented approach
prices set according to how much customers will pay
explain competitor-oriented approach
prices set based on competitors’ prices
explain value-oriented approach
prices set on basis of buyers’ perceptions of specific product-service attribute values rather than on costs or competitors’ prices
what is loss-leader pricing
pricing strategy where a good is sold at below its market price in order to stimulate profit through sale of other goods
example of loss-leader pricing
draws you into shop and shop accepts loss on product such as milk
what is promotional pricing
encourage you to try something new
example of segmentation pricing
classes on trains and planes
what is negotiated pricing dependent on
bargaining power
what is relationship pricing used to do
develop a longer relationship
what are B2B buyers and sellers seeking to do
B2B buyers and sellers are seeking to resolve mutual needs to maximise profits
what are B2B marketing relationships compared to B2C
B2B marketing relationships between suppliers and organisational buyers are close, long term and formal compared to B2C
what are ethical issues in pricing
price fixing, predatory pricing, deceptive pricing, product dumping, price gouging
what is deceptive pricing
retailers use deceptive means to trick the customers into thinking they are paying a lower price than what they actually are
what is price gouging
price far higher than cost
good example of price gouging
pharmaceutical industry
what is pricing the only one of the 4ps to do
only one of the 4ps that creates revenue
