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MKTG100 > Pricing Lecture Week 8 > Flashcards

Pricing Lecture Week 8 Flashcards

1
Q

What is Pricing? And what does pricing actually mean?

A

pricing is the value exchanged in a marketing transaction. Total sales, revenue and profit.

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2
Q

Profit=

A

total revenue - total costs (expenses)

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3
Q

Profits=

A

(price x quantity sold) - total costs

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4
Q

Characteristics of price:

A
  • a measure of value to both buyers and sellers.
  • the amount of money charged for a product or service.
  • The sum of all values that consumers exchange for the benefits and bonuses of having the product.
  • Often the sellers notion of value.
  • Start pricing with research for how consumers value the product.
  • Hassle in shopping, finding the product, decision which product to buy, finding the store, finding the information.
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5
Q

What creates value via profits? And what creates marketplace value?

A
  1. Price.

2. Promotion.

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6
Q

What is Price Competition?

A

Emphasising price and matching/beating competitors prices. Main focus around price and maintaining and edge to beat competitors prices.

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7
Q

Name two or three price competition characteristics

A

To compete effectively, the firm must be the low-cost seller.
Frequent Price Wars
Flexibility is provided, beware of price wars highly competitive

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8
Q

What is Non-Price Competition?

A

Emphasising factors other than price to distinguish a product from competing brands.

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9
Q

What is a major advantage of Non-Price Competition?

A

A company can build customer loyalty and consumer satisfaction to its brand.

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10
Q

Name three or four Non-price competition characteristics

A

Features
Quality
Promotion
Packaging

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11
Q

What are the six important factors that influence Pricing Decisions?

A
  1. Customers perception of the product
  2. Customer interpretation of price
  3. Demand
  4. Other marketing mix variables
  5. Costs
  6. Types of pricing objectives
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12
Q

Name in the correct order the six steps for establishing prices

A
  1. Development of pricing objectives
  2. Assessment of target market`s evaluation of price
  3. Evaluation of competitors prices
  4. Selection of a basis for pricing
  5. Selection of a pricing strategy
  6. Determination of a specific price
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13
Q

Define pricing objectives

A

Pricing objectives are what the company/firm/business wants to achieve through pricing to maintain success and gain profits. Pricing objectives must be obviously stated and be completed in a certain timeframe- smart goals - SPECIFIC, MEASURABLE, ATTAINABLE/ACHIEVABLE, RELEVANT, TIMEBOUND

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14
Q

What does the assessment of the Target Market`s evaluation of Price refer to?

A

The significance/importance of price depends on the type of product, the type of target market and the purchase situation.

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15
Q

What does price also rely on?

A

Price also depends on the perception of value which is a combination of price and quality attributes.

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16
Q

What does price elasticity refer to?

A

Price elasticity is how much demand will change for a given change in price, price sensitivity.

17
Q

Name the two different influences that effect price elasticity

A

Availability on substitute products - other similar goods.

Whether price change is perceived as temporary or permanent.

18
Q

Describe the evaluation of competitors prices stage/step

A 
In competitive situations & scenarios, marketers must keep prices the same as, or lower than competitors prices. 
Competitors prices:
Price above (harvest)
Price to march (hold)
Price below (build)
19
Q

Identify and describe the 5 various pricing selection methods

A

Cost-based pricing: adding a dollar amount or percentage to the cost of the product.
Cost-plus pricing: Adding a specific dollar amount or percentage to the seller`s cost.
Mark-up pricing: Adding to the cost of the product a predetermined percentage of that cost.
Value-based pricing: Based on the level of benefits offered by the other products.
Competition-based pricing: Influenced primarily by competitors prices.

20
Q

Name/identify two/three pricing methods based on costs:

A 
Simple to calculate
Low risk approach
Price will at least cover for the costs
Doesn`t consider competitors prices
Not related to market demand
Not related to the PLC stage
21
Q

Identify the four different pricing strategy categories and provide some examples from each pricing strategy

A

Differential pricing - Periodic & Random Discounting- New or used cars involves negotiation.
New-product pricing- Price skimming - highest price possible & Penetration pricing- lower prices than competitors, increase market share/market growth.
Product-line pricing: Captive- pricing the basic product in a product line low while pricing relative items at a higher level & Premium Pricing- pricing the highest quality or most versatile product higher than other models in the product line.
Psychological pricing: Everyday low costs/prices- setting a low price for products on a regular, constant, consistent basis. Odd-even pricing- ending the price with certain numbers to influence the buyers perception of the price or product pricing that attempts to influence a customers perception of price to make a products products price more attractive and appealing.
Promotional pricing: Price leaders.- e.g. $44.99 or $19.49. prestige pricing- Setting prices at al artificially high level to convey prestige or a premium quality level.
Comparison discounting.

22
Q

Name two advantages and two disadvantages for new product pricing for the price skimming strategy

A

Advantages
1. Recover R&D costs more efficiently and quickly.
2. High price may signify high/premium quality.
Disadvantages
1. Market share growth is slow
Profits may attract competition.

23
Q

Name two advantages and two disadvantages for new product pricing for the Penetration pricing strategy

A 
Advantages
1. Builds market share (market penetration)
2. Discourages competition.
Disadvantages
1. Longer time to recover costs
2. Possible cash flow problem.
24
Q

Describe the determination of a Specific Price (tactical level decisions)

A
  • The use of a systematic approach when establishing final price.
  • Consider environmental forces & marketers understanding.
25
Q

What are the different periods of the year to discounting for shops/stores/ and retail outlets?

A

Easter, Christmas sales, Winter, Summer- undifferentiated strategy. Compared to a differentiated strategy- any random time in the new world. Price reductions offered at specific times of the year.

26
Q

Name and Identify the 8 types of price discounting

A
  1. Trade Discounts.
  2. Quantity discounts.
  3. Cash Discounts.
  4. Seasonal discounts.
  5. Allowances.
  6. Special-event pricing
  7. Periodic discounts.
  8. Random discounts.
27
Q

Link the definitions to the Discounts for channel members:

Discounts designed and created to encourage fast/early payment if invoices

A

Cash discounts.

MKTG100 (5 decks)

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