Pricing Strategies Flashcards
What is the Economic Value to Customer (EVC)?
A measure of value an individual customer gets from using a company’s products or services
How do companies develop a pricing strategy?
Assess the value customers place on products and willingness to pay through market research:
1. Qualitative Methods (interviews, observations)
2. Quantitative Methods (data analysis)
Why is UGC a valuable source of information?
It is often high in volume and updated constantly, allowing it to be tracked over time
What is first-degree price discrimination?
It is a pricing strategy that enables personalized pricing based on individual contexts.
What is dynamic pricing?
Dynamic pricing is when prices fluctuate based on real-time supply and demand
What is second-degree price discrimination?
Second-degree price discrimination involves charging different prices based on the amount or quantity consumed.
How does perfect price discrimination affect consumer surplus?
In perfect price discrimination, the producer captures all consumer surplus, leaving consumers with no economic benefit beyond the good or service itself.
What does “versioning” mean in the context of price discrimination?
Versioning involves offering different versions of a product at different prices based on features.
What is third-degree price discrimination?
Third-degree price discrimination occurs when a company charges different prices to different consumer groups.
What is Bundling?
Combining two or more products together and charging one price for the bundle
Why do companies bundle their products with other companies?
Bundling can be a great strategy for lock-in and amplifying network effect and can form an oligopoly
