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Marketing > Pricing Decisions > Flashcards

Pricing Decisions Flashcards

1
Q

What is yield/return value?

A

Highest amount the consumer is willing to pay to use the need satisfaction

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2
Q

What is the replacement value?

A

The amount that is paid to obtain a product

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3
Q

What is consumer surplus?

A

The extra need satisfaction

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4
Q

What does price mean for business organisation?

A

Need prices to exist and survive.

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5
Q

What are price takers

A

No decision about the prices they charge.

External things fix the prices.

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6
Q

What are price makers

A

Have control over the decision about the prices they charge.

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7
Q

What is a reference/expected price?

A

Represents an amount customer regards as fair/appropriate for value received

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8
Q

Add area aspects to reference prices

A

Could differ from actual price
Significant impact whether customer buys or not
Internal standard, against customer evaluates

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9
Q

What is the importance of price -quality?

A

Signal of quality of a product

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10
Q

What are the two different perceptions of prices?

A

💰 high priced=higher quality than lower priced item

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11
Q

How is price a judgement criterion?

A

💰trust price as guideline
💰use guidelines to judge quality
💰price convenient judgement criterion

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12
Q

How is price a snob value?

A

💰high prices indication of scarcity
💰impression of individuality and prestige
💰high standard of living and status associated with materiality

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13
Q

How prices influence perceived risk

A

💸 consider value of of more expensive product against risk of expected lower quality of less expensive product💸

💰buy me expensive to avoid risk of poor quality

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14
Q

How is is demand brand described?

A

Approach market for particular product, with two prices in mind

💰upper limit price. Prices higher than limit, too expensive

💰lower limit price. Prices lower than limit, too cheap,distrust quality

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15
Q

Name the different meanings of the term value

A

💎value is low price💎
💎getting what I want in a product💎
💎quality get for price pay💎
💎what I get is what I gve💎

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16
Q

Describe ‘value is low price’

A

💎pay low price(item on sale)

💎prod is :reduced price, discount,advantage of rebate➡️getting value

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17
Q

Desribe ‘ value is getting what I want in a product’

A

💎benefits received
💎own subjective of usefulness/among of need satisfaction
💎buyers specs criteria
💎extent to which prod performs well➡️value defined

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18
Q

Describe the ‘value the quality I get for the price I pay’

A

💎perceived quality received from purchase -/- price paid
💎affordable quality
💎quality divided by price, highest quotient = best value

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19
Q

Describe ‘value is what I get for what I give’

A

💎trade-off between going to receive and required to give up.
💎BV provides the most benefit for lowest price.
💎

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20
Q

Name two ways for marketer to decide a price

A

😄 following a price leader

😄deciding own price& way a market develops for a product.

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21
Q

Name the 3 ways which legal environment affects pricing strategy

A

🇿🇦 organisations not allowed to fix prices @same amount
Can’t monopolise industry and fix price

Authorities control price of some products(petrol and medicines)💉

Authorities can control way bus gives price info to consumers

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22
Q

Describe aspects of economic conditions

A

🇿🇦 economy doing well :
💸more money to spend
💸New bus start to grow
💸Comp increases ➡️ prices decrease

Conditions bad:
😰Bus lower prices, produces less
😰spend money slowly
😰lower price get rid of stock
😰higher interest rate, harder to borrow money
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23
Q

Name the types of pricing goals

A 
💵 Profit-orientated goal
💵 targeting ROI
💵getting highest profits possible
💵 sales -orientated goals
💵selling more of the product
💵 increasing market share/keeping it the same 
💵goals to keep this as they are
💵stabilising prices in the industry
💵meeting the competition
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24
Q

What is ‘profit-orientated’ goals

A

Get positive ROI on investment

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25
Q

Describe Targeting ROI

A

Bus sets price for specified % ROI

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26
Q

Describe ‘getting highest possible profits’

A

Earn quick ROI, attract comp

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27
Q

Describe sales-oriented goals

A

Sell lots of prod OR

get bigger share of sales than competitors

28
Q

Describe ‘selling more of the product’

A

Sets price @level, sells more of prod
Want Certain share of the market
One hand: price very low, risk not making profit
Other hand: start price war

29
Q

Describe increasing the market share or keeping it the same

A

Get big market share, ROI will increase
Produces a lot.
Make price lower than competitors
☢bus gets bigger without profit

30
Q

Describes goals to keep things as things are

A

Keep things stable
Avoid sales going down
Keep effect of outside influences small

31
Q

Describe stabilising prices in the industry

A

Suitable for market leader that sets prices

32
Q

Describe meeting the competition

A

No price leader, price prods to meet comp

33
Q

Briefly explain pricing strategies for new products

A

💲Setting high prices for highest possible outputs:

  • result high possible profits
  • known as marketing skimming➡️ introduction phase of life cycle

💲setting low prices to discourage competition :

  • low prices
  • introduce to late mass market
  • discourage competitors, take large part of market from them
  • lots of risk
  • long-term planning
34
Q

When do you set high prices for new prods

A 
🆕 know little of product
🆕leader in industry 
🆕uses prices to segment market 
🆕prod one it's kind 
🆕 demand is price elastic
35
Q

When do set low prices for new products

A 
🆕 great deal of comp
🆕 demand price elastic  
🆕 can supply demand
🆕 save on production costs 
🆕 keep comp out of market
36
Q

Briefly describe basic pricing stare gives used by marketers

A

💵 not deliver perfect price but,consider all main factors
💵 consider following factors: cost, profit,value and comp
💵consider:
- lowest price to cover costs and earn profit
- amount to match comp
- amount Match consumers perception

37
Q

What is cost-plus pricing?

A
  • adding set profit to its costs:
    • no. Units produce
    • work out F & V costs
    • add set profits to costs
38
Q

What is mark-up pricing?

A

Calculating products cost per unit, then deciding mark up %

39
Q

What is target pricing?

A

Invest money in machinery and factories

- bus decides level of production it will able to reach.

40
Q

What is break even analysis

A

Works out the amount of sales in units necessary for total income be same as total costs at set price.

Sales>BE=profit
Sales

41
Q

What is demand pricing for pricing on value?

A

Works highest costs can accept for merchandise

Step1: decide final SP through surveys

Step2 : work out mark-up%

Step3: use formula

42
Q

What is Chain-marketing:

A

Looks at mark-ups in chain of organisations, help put prod in market.

43
Q

What is price discrimination

A
  • sets two/more prices for prod
  • appeal to diff final consumer segments
  • higher price for inelastic segments
  • lower price for elastic segments
44
Q

What is going -rate pricing

A

Base prices on comp prices, less on own costs and demand

Charge same as comp

45
Q

What is leadership pricing?

A

Sets prices changes and other bus follows

Change prices as market conditions s change

46
Q

Pricing by competitive bidding

A

2 or more bus submit own prices for particular prod etc.

47
Q

What are exchanges over the Internet?

A
  • market prod over int for set period of time
  • middleman for a sale
  • electronic exchange get % of SP
  • conducted writhing various market places
  • buyers can ask
  • suppliers send bid
48
Q

What is volume discount pricing

A

Buyers pay less for each single prod if buy lot of prod

49
Q

How do use a two-part pricing structure

A

Using set price and a linked changeable charge for each thing buyer buys.

50
Q

What is bundle pricing?

A

Pricing prods only part of a bundle

51
Q

What is pure bundling?

A

Offers products only as part of bundle

52
Q

What is mixed bundling?

A

Internet lectern if prods.

Price of bundle less than total price of individual parts

53
Q

What is 1st degree price discrimination

A

Get consumers pay exactly what they willing to pay

54
Q

What is 2nd price discrimination?

A

Work out how much consumer willing to pay each additional prod

55
Q

What is 3rd degree discrimination

A

Puts customers into groups
According to willingness to pay
Charges each group a different price
E,g sterkinekor

56
Q

What is frenzy pricing schemes

A

Cas using over demand through very low prices
Create excitement
Represent s period of wild excitement

57
Q

What are the 6 guidelines to setting prices for prods

A

🎨 setting pricing obj, to position market offering:
- easier to Set a price

🎨 determine the demand: price will affect demand level & impact bus obj

🎨 estimate the costs: charge a price, cover production, distribution, selling of prod

🎨 analyse competitor costs, prices, offers: evaluate comp price prod features

🎨select pricing method: consider price of prod, comp price, consumer assessment

🎨 finally select the price:

  • impact of other marketing activities
  • companies pricing policy
  • impact of price on other parties
58
Q

What does price mean to consumers?

A

💰Price they pay, give up some of spending money
💰Buy products for highest possible satisfaction
💰add value to product due to satisfaction of using product

59
Q

Define Price

A

The value expressed in Rands or cents

60
Q

Price is therefore…

A

The value which is connected to a product or service
or
the amount of money needed to obtain prod and the benefit that goes with it

61
Q

what questions must ask when decide on right price?

A
  1. Who is the primary target market?
  2. What is the market position of org?
  3. What are the perceptions of customers about competing brands?
  4. What is the total cost to deliver products to the market?
  5. What are the sales and profit projections of the org?
62
Q

Why is price important in marketing management?

A
  1. Most flexible marketing mix variable
  2. Setting the right price?
  3. Trigger of first impressions
  4. Important part of sales promotion
63
Q

What are the factors of economics of pricing?

A
  1. Substitute products
  2. Complementary products
  3. Income of consumers
  4. size of market
  5. consumer tastes
  6. Marginal revenue
64
Q

What is elastic demand?

A

When demand changes a lot

65
Q

What is inelastic demand?

A

demand hardly changes, small change in price

66
Q

How to set a price for a product?

A

Step 1: Establishing pricing objectives

step 2: Estimate demand, costs and profits

step 3: choose a price strategy to determine base price.

step 4: Fine tune base price with pricing tactics

Marketing (6 decks)

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