Price

Question 1

Price

Answer 1

value exchanged for offering, measures value to buyers and sellers. only mix element that produces revenue. captures value through profit

Question 2

5C’s of pricing

Answer 2

company objectives, competition, costs, customers, channel members

Question 3

Price competition

Answer 3

match or beat competitor pricing. frequent pricing changes on standardised products

Question 4

Non-price competition

Answer 4

factors other than price distinguish product from competitors. features, quality, promotion, packaging

Question 5

Factors affecting pricing decisions

Answer 5

objectives (marketing and pricing), costs, marketing mix variables, demand, customer interpretation of price and product, resellers, government, society

Question 6

Economic factors on pricing

Answer 6

affect consumer spending and perception on price and value and therefore demand

Question 7

Steps for establishing price

Answer 7

develop objectives, asses target market perception on price, evaluate competitors, select basis, select strategy, determine specific price

Question 8

Developing pricing objectives

Answer 8

what company wants to achieve, forms basis of decisions, SMART, consistent with marketing and overall objectives

Question 9

Pricing objective examples

Answer 9

sales, cash flow, survival, market share, profit/ROI, competitive effect, customer satisfaction, image/product enhancement, position

Question 10

Assessing target market evaluation of price

Answer 10

perception of value from price and quality attributes. Also affected by demand

Question 11

Price elasticity

Answer 11

how demand will change with change in price. elastic = drastic change. inelastic = little change

Question 12

Influence on price elasticity

Answer 12

availability of products, price change viewed as temporary or permanent

Question 13

Evaluation of competitor prices

Answer 13

Price above (strong brand equity - harvest), to match (price sensitive - hold) or below (low quality or new - build).

Question 14

Selection of basis for pricing

Answer 14

cost-based pricing, customer value-based pricing, competition-based pricing

Question 15

Cost-based pricing

Answer 15

adding dollar amount or percentage to cost of product. have to convince consumer to accept price. cost plus or mark up

Question 16

Cost plus pricing

Answer 16

adding specific dollar amount or percentage to seller’s cost

Question 17

Mark up pricing

Answer 17

adding pre determined percentage to cost of product

Question 18

Advantages of cost based pricing

Answer 18

simple to calculate, low risk, at least covers costs.

Question 19

Disadvantages of cost based pricing

Answer 19

doesn’t consider competitor, not related to market demand, may not be consistent with brand image, not related to PLC stage

Question 20

Customer value-based pricing

Answer 20

based on benefits offered and demand. desired price of target market, more likely to buy.

Question 21

Competition based pricing

Answer 21

influenced by competition prices. consumers judge on value and price compared to similar products

Question 22

Pricing strategies

Answer 22

differential pricing, new product pricing, product mix pricing, psychological pricing, promotional pricing

Question 23

Differential pricing strategy

Answer 23

different prices for different customers but same product. negotiated and secondary market

Question 24

Negotiated pricing

Answer 24

bargaining

Question 25

Secondary market pricing

Answer 25

one price for primary target market and another for secondary. often international

Question 26

New product pricing strategy

Answer 26

price skimming or penetration

Question 27

Price skimming

Answer 27

charging highest possible price buyers who most desire will pay. recover R&D, quick cash flow, high quality. market share growth slow, attract competition

Question 28

Penetration pricing

Answer 28

setting prices low to penetrate a market and gain market share. discourage competition, economies of scale, brand loyalty. long cost recovery, cash flow problems

Question 29

Product mix pricing strategies

Answer 29

establishing and adjusting prices of multiple products across mix. Price lining, optional product pricing, captive pricing, bundle pricing

Question 30

Price lining

Answer 30

setting limited price points along entire product line

Question 31

Optional product pricing

Answer 31

optional or accessory products sold with main product

Question 32

Captive pricing

Answer 32

pricing products that must be sold with the main product, main product is cheap, related items expensive

Question 33

Bundle pricing

Answer 33

packaging two or more complementary products together and selling for a single price

Question 34

Psychological pricing

Answer 34

influences customer perception of price to make it more attractive. reference, bundle, multiple unit, EDLP, odd-even, customary, prestige

Question 35

Reference pricing

Answer 35

pricing a product at moderate level and placing next to an expensive similar product

Question 36

Multiple unit pricing

Answer 36

two or more identical products for the price of one

Question 37

EDLP

Answer 37

everyday low price.

Question 38

Odd-even pricing

Answer 38

ending price in certain numbers to influence buyer perception of price or product

Question 39

Customary pricing

Answer 39

based on traditional prices or perceived customer expectation

Question 40

Prestige pricing

Answer 40

setting high price to convey high quality

Question 41

Determining specific price

Answer 41

consider environmental forces and price adjustments

Question 42

Reasons for price adjustments

Answer 42

difference in customer, product, location, changing marketing environment

Question 43

Price adjustment strategies

Answer 43

trade discounts, quantity discount, cash discount, seasonal discount, allowances, special even pricing, periodic discounts, random discounts

Question 44

Discount pricing

Answer 44

straight reduction on product price during stated period of time or when purchasing larger quantities

Question 45

Allowance pricing

Answer 45

promotional monies paid by suppliers to retailers to feature their products

Question 46

Segmented pricing

Answer 46

allows for difference in customers, products or locations

Question 47

Promotional pricing

Answer 47

temporarily reducing prices to increase short term sales

Question 48

Geographical pricing

Answer 48

adjusting price on location

Question 49

Dynamic pricing

Answer 49

adjusting prices continually to meet characteristics and needs of individuals

Question 50

Types of market demand

Answer 50

pure competition, monopolistic, oligopolistic, pure monopoly

Question 51

Pure competition

Answer 51

many buyers and sellers, uniform trading, no marketing strategy

Question 52

Monopolistic

Answer 52

many buyers and sellers, range of prices, differentiation, price not affected by competition

Question 53

Oligopolistic

Answer 53

few sellers, high sensitivity to competitor, hard for new sellers to enter

Question 54

Pure monopoly

Answer 54

one seller, regulated/non regulated pricing,