Module 1.1 The Integral Components and Framework For Pricing Strategy And Value Creation

Question 1

is the amount that consumers will be
willing to pay for a product. Marketers
must link the price to the product’s real
and perceived value, while also
considering supply costs, seasonal
discounts, competitors’ prices, and retail
markup.

Answer 1

Price

Question 2

is a technique that a company
apply to evaluate the cost of their products. This
process is the most challenging challenge
encountered by a company, as the price should
match the current market structure and
compliment the expenses of a company and gain
profits. Also, it must take the competitor’s product
pricing into consideration so, choosing the correct
pricing method is essential.

Answer 2

Pricing Method

Question 3

are the methods and
procedures companies employ to
determine the rates they charge for their
goods and services. Pricing is the amount
you charge for your items; pricing strategy
is how you calculate that number.

Answer 3

Pricing Strategy

Question 4

BENEFITS OF A GOOD PRICING STRATEGY

Answer 4

❑Symbolizes value
❑Attract buyers
❑Give consumers confidence in your offerings

Question 5

Consumers tend to
associate less expensive products with
cheap, sometimes shoddy, production
values. Products of a higher price tend to be
associated with higher value.

Answer 5

Symbolizes value

Question 6

If a price is too high, the
customer may not be able to afford it. The ideal
price should be set at a level that attracts
people to buy your product or service,
compared with a competitor.

Answer 6

Attract buyers

Question 7

Prices that are too low may make customers less
likely to trust that your goods are of the best
quality.

Answer 7

Give consumers confidence in your offerings

Question 8

Types of Pricing Strategies

Answer 8

1.Cost-Plus Pricing Strategy
2. Competitor-Based Pricing
Strategy
3. Value-Based Pricing Strategy
4. Loss Leader Pricing Strategy
5. Penetration Pricing Strategy
6. Everyday Low Pricing Strategy
7. Economy Pricing Strategy
8. Premium Pricing Strategy
9. Skimming Pricing Strategy
10. High-Low Pricing Strategy
11. Dynamic Pricing Strategy

Question 9

One way to price a product is to add a fixed percentage to the
manufacturing costs for each unit. This pricing technique is known
as “cost plus” or “markup pricing.”

Answer 9

Cost-Plus Pricing Strategy

Question 10

The method of determining your rates, known as value pricing,
considers how much your customers value what you provide and
adjusts your prices accordingly. You must employ a marketing
mix to retain sales and deliver more value to your clients in the face
of increased competition or a recession.

Answer 10

Value-Based Pricing Strategy

Question 10

aims to draw customers by
providing products and services at lower costs than rivals.

Answer 10

Penetration Pricing Strategy

Question 10

Competitive pricing is the practice of setting your product or
service prices based on the pricing of your competitors in your
market or niche rather than on your company’s costs or desired
profit margins.

Answer 10

Competitor-Based Pricing Strategy

Question 10

is a marketing strategy where one or more retail
goods are chosen and sold below cost – at a loss to the retailer – to
entice customers.

Answer 10

Loss Leader Pricing Strategy

Question 11

Retailers use “everyday low pricing” to maintain perpetually low
prices for their items rather than special promotions or sales.

Answer 11

Everyday Low Pricing Strategy

Question 12

aims to get the most price-conscious customers to
purchase the product. Because they don’t have to pay for
additional promotion or marketing expenditures, businesses may
price their products according to their manufacturing value.

Answer 12

Economy Pricing Strategy

Question 13

Businesses that charge premium prices do so because they have a
specific product or brand that no one else can match. Suppose
you have a significant competitive edge and know you can
charge a higher price without being undercut by a product of
comparable quality. In that case, you should consider using this
technique.

Answer 13

Premium Pricing Strategy

Question 14

is a dynamic pricing strategy businesses use to
increase sales of new goods and services.

Answer 14

Skimming Pricing Strategy

Question 15

 involves including only those elements in a product or
service that a fully-informed customer should be willing
to pay for price of an item.

 The price that a customer will pay should be appropriate
and just based on the value of an item.

 The term “should be” is used because what customers
will actually pay depends upon how the product is
marketed and is usually somewhat short of the full value.

Answer 15

VALUE CREATION

Question 15

also known as the economic value to the
customer.

It is not a measure of the price you can charge,
but a measure of the relative price potential
that a feature or service enhancement could
represent for different segments of customers.

Answer 15

ECONOMIC VALUE ESTIMATION

Question 15

is a strategy where a business focuses on marketing
campaigns to entice customers to make purchases.

Answer 15

High-Low Pricing Strategy

Question 16

involves charging variable costs depending on
who or when you purchase your goods or service. Flexibility in
pricing is one of this technique’s essential features, which considers
supply and demand.

Answer 16

Dynamic Pricing Strategy

Question 17

Differentiating benefits of your products.

Its goal is to established a value for the
customer, for them also to become
knowledgeable regarding on its benefits, not just
on its pricing.

Answer 17

VALUE COMMUNICATION