Price

Question 1

What is Price?

Answer 1

Price= Customer cost= the sum of everything the customer gives up for having/using the product

Question 2

Traditional Pricing

Answer 2

competition-based; setting prices based on competitors’ strategies, prices, costs, and market offer

cost-based; setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return

Question 3

Value-Based Pricing

Answer 3

setting price based on buyer’s perceptions of value rather than on the seller’s cost

good-value; offering the right combination of quality and good service at a fair price

value-added;attaching value-added features and service to differentiate a company’s offers while charging higher prices

Question 4

Marketers favor…

Answer 4

VALUE BASED PRICING

Question 5

Market Skimming

Answer 5

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

example; HDTV

Question 6

Market Penetration

Answer 6

setting a low price for a new product to attract a large number of buyers and a large market share

example; Dell

Question 7

The Concept of “Value”

Answer 7

customers must believe that the value delivered is greater than the price before they will buy

• emotion value
• financial value
• must define what is being sold

Question 8

Product Line pricing

Answer 8

setting prices across an entire product line based on cost difference between the products, customer evaluation of different features

example; Rossignol offers 7 different collections of alpine skis of all designs and sizes at prices that range from $150 to $1,100.

Mr. Clean car wash options

Question 9

Optional Product pricing

Answer 9

pricing optional or accessory products sold with the main product

example; GPS with a car or bluetooth

Question 10

Captive Product Pricing

Answer 10

pricing products that must be used with the main product

Question 11

By-Product Pricing

Answer 11

pricing low-value by-products to get rid of or make money on them

example; Zoo Doo

Question 12

Product Bundle Pricing

Answer 12

combining several products and offering the bundle at a reduced price

example; combo meal at McDonalds

Question 13

Discount Pricing

Answer 13

reducing prices to reward customer responses such as paying early or promoting the product

Question 14

Segmented Pricing

Answer 14

Adjusting prices to allow for differences in customers products or locations

Question 15

Psychological Pricing

Answer 15

Pricing that considers the psychology or prices, not simply the economics ; the prices says something about the product

Question 16

“00”

Answer 16

high end product

Question 17

Product ending in “8” or “9”

Answer 17

means bargain

Question 18

Promotional Pricing

Answer 18

“Loss Leaders”

example; liters of Coke, Costco gas, free turkey

Question 19

Geographical Pricing

Answer 19

pricing for products decided based on where the customers located in different parts of the US and world

example; airport is more expensive

Question 20

Dynamic Pricing

Answer 20

adjusting prices continually to meet the characteristics and needs of individual customers and situations

Question 21

Types of Segmented Pricing

Answer 21

• Customer segment
• Product form
• Location
• Time

Question 22

Price Fixing ( protect competitors from)

Answer 22

taking with competitors to set prices

Question 23

Predatory Pricing ( protect competitors from)

Answer 23

selling below cost with the intention of punishing a competitor or putting them out of business

Question 24

Price Discrimination ( protect consumers from)

Answer 24

ensure same price to customers at given level of trade

Question 25

Price Maintenance ( protect consumers from)

Answer 25

requiring dealers to charge a specified retail price

Question 26

Deceptive Pricing ( protect consumers from)

Answer 26

Seller states price that may mislead customers