Marketing Summative Test 2 Flashcards
Monetary worth of Goods/Services.
Price
The process of estimating the worth of a product or service.
Pricing
Covers the cost and profit.
Product Price
Lowering expenses is the most efficient approach to product pricing.
True or False
True
Prices should not be reviewed regularly to reflect the dynamics of
cost, market demand, reaction to competition, and profit objectives.
True or False
False
Prices must be set to ensure sales.
True or False
True
The element in the marketing mix that generates revenue.
Price
Traditional Pricing Strategies
- Cost-based Pricing
- Cost-plus Pricing
- Customer Value-based Pricing
- Competition-based Pricing
Based on the costs for producing, distributing, and selling the product or service with a reasonable return for the company’s investment and risks.
Cost-based Pricing
Considered the simplest pricing method; also known as markup pricing.
Cost-plus Pricing
Involves understanding how much consumers value the market offering based on the benefits and satisfaction; not based on the seller’s cost but on the buyer’s perception.
Customer Value-based Pricing
Entails setting prices based on
competitors’ tactics, costs,
price, and market offers; pays attention to the price levels currently set in the market.
Competition-based Pricing
Internal Factors Affect Pricing Decisions
- Cost
- Marketing Mix Strategy
- Product Life Cycle
- Image of the Firm (Brand Image)
It is the reason for the price that can be paid for goods and services.
Cost
When setting rates, the company should cover fixed and variable costs.
True or False
True
Price decisions, product coordination, placement, and advertising decisions must be organized marketing priorities of your business like your target market and positioning strategies.
Marketing Mix Strategy
Price is an essential marketing mixing method that aims to attain marketing goals.
True or False
True
The various stages of the product life cycle affect on pricing decisions.
Product Life Cycle
The identity and credibility of the company is another aspect that affects the decision on pricing.
Image of the firm (Brand Image)
External Factors Affect Pricing Decision
- Competition
- Consumers/Customers
- Economic terms and conditions
- Government Regulated Economy
When determining the price of the product, the company must consider the degree of competition in the marketplace.
Competition
Keep the consumer’s buying power and price sensitivity in mind when setting the price.
Consumers/Customers
Indicators include interest rate, inflation, economic growth, and recession.
Economic terms and conditions
Is another aspect that needs to be recognized.
Government Regulated Economy
Is a key to business success.
Price
Effective pricing decreases revenue, laying the groundwork for a thriving business.
True or False
False
New Product Pricing Strategies
- Market-skimming pricing
- Market-penetration pricing
- Product-mix pricing
Establishes a high price for the new product to skim maximum revenues; fewer but more lucrative
sales.
Market-skimming pricing
Sets a low price for the new product or service to attract many buyers and a large market share; commonly used as market entry pricing.
Market-penetration pricing
Product-mix pricing
- Product line pricing
- Optional-product pricing
- Captive-product pricing
- By-product pricing
- Product bundle pricing
Sets the price steps in a product line based on cost differences, customer evaluations, and competitors’ prices.
Product line pricing
To sell optional or accessory products to their main product.
Optional-product pricing
Sets a price for products that must be used with the main product.
Captive-product pricing
Sets a price for by-products to make the main product’s price more competitive.
By-product pricing
Combines several products and offers the bundle at a reduced price.
Product bundle pricing
Prices are the final price consumer paid throughout history; a result of bargaining between seller and buyers.
Buyer-Seller Interactivity
A method of establishing multiple prices, discounts, and offers for products and services that are compatible with the organization’s
goals and strategy.
Price Structure
Pricing Structure
Free
Basic
Premium
Enterprise
Entails charging different prices to different clients for the same or comparable goods or services.
Price Segmentation
Involves how a price is expressed when it is communicated to potential customers.
Price Format
