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Marketing 330 > Final Exam - Chapter 21 > Flashcards

Final Exam - Chapter 21 Flashcards

1
Q

6 Steps of Pricing Process

A

development of pricing objectives, assessment of target market’s evaluation of price, evaluation of competitors’ prices, selection of a basis for pricing, selection of a pricing strategy, determination of a specific price

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2
Q

PP Step 1 - Development of Pricing Objectives

A

goals that describe what a firm wants to achieve through pricing

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3
Q

Survival

A

adjust price levels so the firm can increase sales volume to match organizational expenses

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4
Q

Profit

A

identify price and cost levels that allow the firm to maximize profit

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5
Q

Return on Investment

A

identify price levels that enable the firm to yield targeted ROI

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6
Q

Market Share

A

adjust price levels so the firm can maintain or increase sales relative to competitors’ sales

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7
Q

Cash Flow

A

set price levels to encourage rapid sales

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8
Q

Status Quo

A

identify price levels that help stabilize demand and sales

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9
Q

Product Quality

A

set prices to recover research and development expenditures and establish a high-quality image

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10
Q

PP Step 2 - Assessment of the Target Market’s Evaluation of Prices

A

depends on type of product, type of target market, purchase situation; value combines a product’s price and quality attributes (ex: cut lettuce vs. whole head)

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11
Q

PP Step 3 - Evaluation of Competitor’s Prices

A

marketers should use competitors’ prices to help them establish their own prices

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12
Q

PP Step 4 - Selection of a Basis for Pricing

A

can choose to price based on cost, demand, or competition; market costs usually end up bouncing between all three

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13
Q

Things to Consider When Selecting A Basis

A

type of product, market structure, brand’s market share, customer characteristics

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14
Q

Cots-Based Pricing

A

adding a dollar amount or percentage to the cost of the product

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15
Q

Cost-Plus Pricing

A

determine the seller’s cost and add a specified dollar to it; used when production costs are difficult to predict (ex: WWII)

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16
Q

Markup Pricing

A

adding a redetermined percentage of the cost to the price of the product (based on either cost or price)

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17
Q

Demand-Based Pricing

A

customers pay a higher price when demand for the product is strong and a lower price when demand is weak

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18
Q

Competition-Based Pricing

A

pricing influenced primarily by competitors’ prices

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19
Q

Non-Price Factors Affecting Demand

A

market competition, competitors reactions, economic conditions, product quality, available substitutes, service support, ads/promo

20
Q

PP Step 5 - Selecting a Pricing Strategy

A

an approach or course of action designed to achieve pricing and marketing objectives

21
Q

Differential Pricing

A

charging different prices to different buyers for the same quality and quantity of producer (ex: diff. tuition charges for diff. majors)

22
Q

Negotiated Pricing

A

establishing a final price through bargaining between seller and customer (ex: house/car)

23
Q

Secondary-Market PRicing

A

one price for primary target market and a diff. price for another market (ex: prices in the US and in a 3rd world country)

24
Q

Periodic Discounting Pricing

A

Temporary reduction of prices on a patterned or systematic basis (Cars, year old models discounted in fall) May train consumers to wait.

25
Q

Random Discounting Pricing

A

Temporary reduction of prices on an unsystematic basis

26
Q

Price Skimming

A

Charging the highest possible price that buyers who most desire the product will pay

27
Q

Penetration Pricing

A

Setting the price below those of competing brands to penetrate a market and gain a significant market share quickly (Amazon-limit competitors)

28
Q

Product-Line Pricing

A

Establishing and adjusting prices of multiple products within a product line

29
Q

Captive Pricing

A

Pricing the basic product in a product line low to increase demand while pricing related items higher (ex: razors and blades)

30
Q

Premium Pricing

A

Pricing the highest-quality or most versatile products higher than other models in the product line (ex: Apple Computer, Beer, Appliances)

31
Q

Bait Pricing

A

Pricing an item in a product line low with the intention of selling a higher-priced item in the line. (Bait and Switch) Mattress for $20 have none but have many priced at $60

32
Q

Price LIning

A

Setting a limited number of prices for selected groups or lines of merchandise

33
Q

Psychological Pricing

A

Pricing that attempts to influence a customer’s perception of price to make a product’s price more attractive (use of $.99)

34
Q

Reference Pricing

A

Pricing a product at a moderate level and displaying it next to a more expensive model or brand

35
Q

Bundle Pricing

A

bundling together two or more complementary products and selling them at a single price. (Vacations packages, Happy Meal, Internet/phone/Cable Cable channels are bundled)

36
Q

Multiple-Unit Pricing

A

Packaging together two or more identical products and selling them at a single price. Warehouse clubs like Costco 4 packs, 12 packs- increase consumption/increase consumer inventory

37
Q

Everyday Low Prices (EDLP)

A

Pricing products low on a consistent basis/JC Penny tried to do this and it did not work. Mark up less than competition (Garment exploration)

38
Q

Odd-Even Pricing

A

Ending the price with certain numbers to influence buyers’ perceptions of the price or product $.95, $.99 or $1.00

39
Q

Customary Pricing

A

Pricing certain goods on the basis of tradition, Candy Bars/Gum everyone priced the same.

40
Q

Prestige Pricing

A

Setting prices at an artificially high level to convey prestige or a quality image (Cosmetics, Jewelry Mercedes-no real relationship to cost)

41
Q

Professional Pricing

A

fees set by people with great skill or experience in a particular field

42
Q

Price Leader

A

products priced below the usual markup, near cost, or below cost (loss leader)

43
Q

Special-Event Pricing

A

Advertised sales or price-cutting is used to increase sales volume and is linked to a holiday, a season, or other event

44
Q

Comparison Discounting

A

The pricing of a product at a specific level and simultaneously comparing it to a higher price

45
Q

PP Step 6 - Determination of Price

A

sets price using price strategies

Marketing 330 (16 decks)

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