Lecture 10: Pricing Concepts & Strategies

Question 1

price

Answer 1

only mix element that generates revenue; indicator of quality and highly visible

Question 2

5 C’s of pricing

Answer 2

• company objectives
• customers
• competition
• costs
• channel members

Question 3

company objectives

Answer 3

• profit oriented
• sales oriented
• competitor oriented
• customer oriented

Question 4

customers

Answer 4

demand curve & elasticity of demand

Question 5

competition (pricing)

Answer 5

how does the firm’s offering compare in terms of value and what are the competitors’ pricing strategies

Question 6

monopoly

Answer 6

one firm controlling market (less price competition, fewer firms)

Question 7

oligopoly

Answer 7

handful of firms controlling market (more price competition, fewer firms)

Question 8

monopolistic competition

Answer 8

many firms selling differentiated products at different prices (less price competition, many firms)

Question 9

pure competition

Answer 9

many firms selling same for same prices (more price competition, many firms)

Question 10

major pricing strategies (2 things)

Answer 10

cost-based and value-based

Question 11

cost-based pricing

Answer 11

set the floor for price company charges (e.g., cost-plus pricing)

Question 12

value-based pricing

Answer 12

good-value perceptions (everyday low pricing or high-low)

Question 13

new product pricing (2 things)

Answer 13

market skimming - high price for new products that will be reduced as competition increases
market-penetration - setting low price to attract new customers and grow market share

Question 14

pricing tactics

Answer 14

price lining
sales model/dynamic
price bundling
leader pricing

Question 15

price lining

Answer 15

establishing price floor and ceiling for line of similar products to represent differences in quality

Question 16

sales model/dynamic pricing

Answer 16

changes prices to meet changes in demand

Question 17

price bundling

Answer 17

pricing of more than one product for a lower price

Question 18

leader pricing

Answer 18

aggressively pricing and advertising a regularly pruchased item at or barely above store’s cost

Question 19

markdowns

Answer 19

summer sales, quantity/size discounts, coupons

Question 20

segmented pricing

Answer 20

• customer sergment (e.g., musem pricing)
• product-form (e.g., Evian)
• location-based
• time-based (e.g, resorts, seasons)

Question 21

psychological pricing

Answer 21

• price as indicator of quality
• reference prices
• symbolic and visual qualities associated wiith numbers