pricing concepts for establishing value

Question 1

company objectives

Answer 1

profit oriented
sales oriented
competitor oriented
customer oriented

Question 2

profit orientation

Answer 2

price determined on maximum profit

Question 3

sales orientation

Answer 3

focus on increasing sales, long term market share

iTunes

Question 4

competitor orientation

Answer 4

use of price as a competitive tool
create a barrier to entry
shake up traditional industry
Uber

Question 5

customer orientation

Answer 5

focus is on customer expectation and matching prices to them

add-ons for budget airlines

Question 6

5 Cs of pricing

Answer 6

competition
company objectives
costs
customers
channel members

Question 7

customers

Answer 7

how customers react impacts pricing approach

knowing a demand curve helps see relationships

Question 8

costs

Answer 8

set the floor price
fixed costs
variable costs
total costs
scale and experience effects
break-even analysis

Question 9

Contribution per unit

Answer 9

price - variable cost per unit

Question 10

breakeven point =

Answer 10

fixed costs/contributions per unit

Question 11

competition

Answer 11

pure competition
monopolistic competition
oligopoly
pure monopoly

Question 12

channel members

Answer 12

must consider reseller profit margins
manufacturers, wholesalers and retailers can have different perspectives on pricing
consider international prices, grey market areas
ebay

Question 13

the internet

Answer 13

easily research prices
more price sensitive
broadened scope of competition
showrooming

Question 14

economic factors

Answer 14

cross shopping

inflation and interest rates

Question 15

3 main methods to set prices

Answer 15

cost based
competitor based
value based

Question 16

cost based pricing

Answer 16

determine final price by starting with cost
ignores demand and comp
sellers certain about costs
minimise price competition
perceived fairness

Question 17

competition based pricing

Answer 17

set prices relative to competition

may signal quality or positioning

Question 18

value based pricing

Answer 18

improvement value method - estimates the improvement value of the product relative
cost of ownership method - may be willing to pay more if overtime it costs less to own

Question 19

new product pricing strategies

Answer 19

market skimming

market penetration

Question 20

price tactics aimed at consumers

Answer 20

markdowns
quantity discounts
seasonal discounts
coupons
rebates
leasing
price bundling
leader pricing
price lining

Question 21

B2B pricing tactics

Answer 21

seasonal discounts
cash discounts
allowances
quantity discounts
uniform delivered versus zone prices