MARKETING CHAPTER 7 Flashcards
The second variable in marketing mix.
PRICE
Is the money, good or service exchanged for the ownership or use of a good or service.
PRICE
Another name of price, commodity purchased - EDUCATION
TUITION
Another name of price, commodity purchased - USE OF MONEY
INTEREST
Another name of price, commodity purchased - GOVERNMENT SERVICE
TAXES
Another name of price, commodity purchased - REGULAR RECEIPT OF A PERIODICAL
SUBSCRIPTION
Another name of price, commodity purchased - USE OF COPYRIGHT
ROYALTY
Another name of price, commodity purchased - USE OF ASSET
RENT
Another name of price, commodity purchased - TAXI OR BUS RIDE
FARE
Another name of price, commodity purchased - SERVICES OF A PHYSICIAN
FEE
Another name of price, commodity purchased - LAWYER’S SERVICES OVER A PERIOD OF TIME
RETAINER
Another name of price, commodity purchased - LONG DISTANCE CALL OR TRAVEL ON SOME HIGHWAYS
TOLL
Another name of price, commodity purchased - SERVICES OF AN EXECUTIVE OR A WHITE COLLAR WORKER
SALARY
Another name of price, commodity purchased - SERVICES OF A BLUE COLLAR WORKER
WAGE
Another name of price, commodity purchased - SALESPERSON’S SERVICES
COMMISSION
Another name of price, commodity purchased - GUEST SPEAKER’S SERVICES
HONORARIUM
Another name of price, commodity purchased - MEMBERSHIP IN A UNION OR CLUB
DUES
May be defined as those activities involved in the determination of the price at which products that will be offered for sale considering the various objectives of the firm.
PRICING
What are the three pricing objectives?
•PROFIT-ORIENTED OBJECTIVES
•SALES-ORIENTED OBJECTIVES
•STATUS QUO-ORIENTED OBJECTIVES
Call for profit generation.
PROFIT-ORIENTED OBJECTIVES
This refers to the pricing objective requiring a certain level of profit.
THE TARGET RETURN OBJECTIVE
This refers to the pricing objective seeking as much profit as possible.
THE PROFIT MAXIMIZATION OBJECTIVE
Refer to those that will provide higher sales volume.
SALES-ORIENTED OBJECTIVE
Requires maintaining the same prices for the company’s products.
STATUS QUO-ORIENTED OBJECTIVE
Status quo pricing may be due to any of the following:
•TO STABILIZE PRICES
•TO MEET COMPETITION
•TO AVOID COMPETITION
Refers to the series of steps adapted in the determination of price.
PRICING PROCEDURE
The Pricing Procedure (5)
•THE DETERMINATION OF THE REALISTIC RANGE OF CHOICE
•THE SELECTION OF PRICING STRATEGY
•THE EVALUATION OF ECONOMIC FEASIBILITY
•THE SETTING OF THE PRICE
The decision-maker may adapt the following: (2)
•MARKET SKIMMING STRATEGY
•PENETRATION STRATEGY
Pricing Approaches (3)
•COST BASED APPROACH
•BUYER BASED APPROACH
•COMPETITION BASED APPROACH
Refers to the setting of prices on the basis of costs. The total costs are calculated and a margin of profit is added.
COST BASED APPROACH
Two types of pricing under the cost based approach.
•COST PLUS PRICING
•TARGET RATE OF RETURN PRICING
This method calls for adding a percentage of cost on top of the total cost.
COST PLUS PRICING
This approach enables a company to establish the level of profits that it feels will yield a satisfactory return.
TARGET RATE OF RETURN PRICING
This approach deals with with consumer perceptions or behavior as bases for determining the selling price of a product or service.
BUYER BASED APPROACH
Buyer based approach is composes of the following: (5)
•PERCEIVED VALUE PRICING
•PRICE-QUALITY RELATIONSHIP PRICING
•LOSS-LEADER PRICING
•ODD-NUMBERED PRICING
•PRICE LINING PRICING
This method establishes the price for a product based on the buyer’s perceptions of the value of the product or service.
PERCEIVED VALUE PRICING
This approach hinges on the observation that consumers associate high price with high quality and low quality with low price.
PRICE-QUALITY RELATIONSHIP PRICING
This refers to the practice of setting low prices on selected products which will result in the generation of less profits, but with the objective of increasing the sales volume of other products sold by the company.
LOSS-LEADER PRICING
This refers to the practice of setting price even below pesos amounts.
ODD-NUMBERED PRICING
This method refers to the practice of selling merchandise at a limited number of predetermined price levels.
PRICE LINING PRICING
Refers to the setting of prices based on what prices are being charged by competitors.
COMPETITION BASED APPROACH
Two kinds under the competition based approach.
•GOING-RATE PRICING
•SEALED BID PRICING
The firm adapts a price based on the competitor’s prices.
GOING-RATE PRICING
The firm sets its price which is thought to be a little lower than the competitor’s.
SEALED BID PRICING
Those that are used to address, the variations in geographical demand, costs, market segments, purchase timing, and other factors.
PRICE ADAPTATION STRATEGIES
PRICE ADAPTATION STRATEGIES are consist of the following: (4)
•GEOGRAPHICAL PRICING
•PRICE DISCOUNTS AND ALLOWANCES
•PROMOTIONAL PRICING
•DISCRIMINATORY PRICING
Refers to the pricing decisions related to products intended for customers in different locations.
GEOGRAPHICAL PRICING
Refers to the situation where the seller quotes the selling price at the point of production, and the buyer selects the mode of transportation and pays all freight costs.
POINT-OF-PRODUCTION PRICING
The seller quotes to all buyers the same delivered price regardless of their locations.
UNDER UNIFORM DELIVERED PRICING
The seller sets prices that are different from zone to zone.
ZONE-DELIVERED PRICING
The strategy where the seller pays for some of the freight charges in order to penetrate more distant markets.
FREIGHT-ABSORPTION PRICING
Are price modifications designed to reward customers for early payment volume purchase, and off-season buying.
DISCOUNT AND ALLOWANCES
Are reductions from the list price that are given by sellers to buyers who either give up some marketing function or provide the function themselves.
DISCOUNTS
Are reductions in price given to final consumers, customers or channel members for doing some tasks for accepting less service.
ALLOWANCES
