M10 Flashcards
is the amount of money that is charged for “something” of value.
PRICE
sets a specific level of profit as an objective. Often this amount is stated as a percentage of sales or of capital investment.
TARGET RETURNED OBJECTIVES
seeks to get as much profit as possible.
PROFIT MAXIMIZATION OBJECTIVE
KEY PRICING POLICIES
Price Flexibility
Price-Levels Over Product Life Cycle
Transportation Costs
Discounts and Allowances
means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities
ONE-PRICE POLICY
The same for everyone
Frequently purchased items
Convenient
Low cost
Maintains goodwill
ONE-PRICE POLICY
means offering the same product and quantities to different customers at different prices.
FLEXIBLE PRICE POLICY
Different customers, different prices
Databases make it easier
Salespeople can adjust prices
Too much cutting can hurt profits
FLEXIBLE-PRICE POLICY
offers products at a price that changes according to the level of demand, the type of customer, or the state of the weather.
DYNAMIC PRICING
Big data can be used to more accurately predict future demand and adapt prices to maximize revenue and profit. So for example, airlines typically adjust prices over time.
DYNAMIC PRICING
tries to sell the top (skim the cream) of a market the top of the demand curve at a high price before aiming at more price-sensitive customers.
SKIMMING PRICE POLICY
may maximize profits in the market introduction stage for an innovation, especially if there are few substitutes or if some customers are not price sensitive.
SKIMMING
useful when you don’t know very much about the shape of the demand curve.
SKIMMING
tries to sell the whole market at one low price. This approach might be wise when the elite market those willing to pay a high price are small.
PENETRATION PRICING POLICY
Most price structures are built around a base price schedule or list price.
DISCOUNT POLICIES
TYPES OF DISCOUNTS
- QUANTITY
- SALE
- CASH
- SEASONAL
- TRADE`
are the prices final customers or users are normally asked to pay for products
BASIC LIST PRICE
are reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves
DISCOUNTS
are discounts offered to encourage customers to buy in larger amounts.
QUANTITY DISCOUNTSA
This lets a seller get more of a buyer’s business, or shifts some of the storing function to the buyer, or reduces shipping and selling costs or all of these.
QUANTITY DISCOUNTS
TWO TYPES OF QUANTITY DISCOUNTS
- CUMULATIVE
- NONCUMULATIVE
apply to purchases over a given period such as a year and the discount usually increases as the amount purchased increases.
CUMULATIVE QUANTITY DISCOUNTS
encourage repeat buying by reducing the customer’s cost for additional purchases. This is a way to develop loyalty and ongoing relationships with customers.
CUMULATIVE DISCOUNTS
apply only to individual orders. Such discounts encourage larger orders but do not tie a buyer to the seller after that one purchase.
NONCUMULATIVE DISCOUNTS
are discounts offered to encourage buyers to buy earlier than present demand requires
SEASONAL DISCOUNTS
are reductions in price to encourage buyers to pay their bills quickly.
CASH DISCOUNTS
is a list price reduction given to channel members for the job they are going to do
TRADE DISCOUNTS
is a temporary discount from the list price.
SALE PRICE DISCOUNTS
means setting a fair price level for a marketing mix that really gives the target market superior customer value.
VALUE PRICING
doesn’t necessarily mean cheap if cheap means bare-bones or low grade. It doesn’t mean high prestige either if the prestige is not accompanied by the right quality goods and services.
VALUE PRICING
try to give the customer pleasant surprises because they increase value and build customer loyalty
VALUE PRICERS
define the target market and the competition.
VALUE PRICERS
fits with strategy planning.
VALUE PRICING
