QUIZ 2 marketing Flashcards
the money, good, or service exchanged for the ownership or use of a good or service.
Price
those activities involved in the determination of the poce at which products that will be offered for sale considering the various objectives of the firm.
Pricing
Pricing Objectives
- Profit-oriented objectives;
- Sales-oriented objectives, or
- Status qou-oriented objectives
refers to the series of steps adapted in the determination of price.
The Pricing Procedure
PRICING STRATEGY
Skimming price
Penetration pricing
strategy a company initially sets a high price for the product and at the same time promotes it heavily via advertising and sales promotion.
Skimming price
company prices its products low in order to penetrate its target as quickly as possible and thereby gain market control
Penetration pricing
Pricing Approaches
Cost based approach
Buyer based approach
Competition Based Approach
pricing refers to the setting of prices on the basis of costs.
Cost based approach
pricing deals with consumer perceptions or behaviour as bases for determining the selling price of a product or service.
Buyer based approach
refers to the setting of prices based on what prices are being charged by competitors. There are two kinds of pricing under this approach
Competition Based Approach
This method established the price for a product based on the buyer’s perceptions of the value of the product or service.
Perceived Value Pricing.
This refers to the practice of setting low prices on selected products which will result in the generation of less profits, but with the objective of increasing the sales volume of other products sold the company.
Loss-leader Pricing.
Pricing. This refers to the practice of setting price even below peso amounts. An example is selling at 99.50 rather than at fiat 100. There are good reasons for this method:
Odd-Numbered Pricing.
This method refers to the practice of selling merchandise at a limited number of predetermined price levels
Price Lining Pricing.
Competition Based Approach
There are two kinds of pricing under this approach. They are the following:
- going-rate pricing; and
- sealed bid pricing.
Under this pricing method, the firm adapts a price based on the competitor’s price. The price adapted may be a little higher or lower than the competitor’s. Less attention is given to the firm’s own costs and demand.
Going-Rate Pricing.
the firm sets its price which is thought to be a little lower than the competitor’s. This happen in biddings where competitors outdo each other in winning the bid. As in going-rate pricing, less attention is also given to the firm’s costs and demand.
Sealed Bid Pricing.
used to address the variation in geographical demand, cost, market segments, purchase timing, and other factors.
Price Adaptation Strategies.
Price Adaptation Strategies.
the strategies consist of the following
- Geographical pricing
- Price discounts and allowances
- Promotional pricing
- Discriminatory pricing
refers to pricing decisions related to product intended for customer in different locations
Geographical Pricing.
Geographical Pricing.The cost of shipping is a primary consideration which led to the following strategies.
- point-of-production pricing
- uniform delivered pricing
- zone-delivered pricing
- freight-absorption pricing
refer to the situation where the seller quotes the selling price at the point of production, and the buyer selects the mode of transportation and pays all freight cost.
Point-of-production pricing
, the seller quotes to all buyers the same delivered price regardless of their locations.
uniform delivered pricing
, the seller sets prices that are different from zone to zone.
zone-delivered pricing
strategy where the seller pays for some of the freight charges in order to penetrate more distant markets.
freight-absorption pricing
are price modifications designed to reward customers for early payment volume purchase, and offseason buying
Price Discounts and Allowances
are reduction from the list price that are given by sellers to buyer who either give up some marketing function or provide the function themselves.
Discounts
are reductions in price given to final consumer, customer or channel member for doing some tasks or accepting less service
Allowances
Discounts are allowances are classified as follows:
Cash discount
Quality discounts.
Seasonal discount
Functional or trade discounts
Allowance
. These are reduction in price to encourage buyers to pay their bills quickly. An example is the one-hundred-peso discount offered to monthly instalment dues of a customer if he pays on or before due dates
Cash discount
These are reductions in unit costs for a larger order.
Quality discounts. These
. These are reductions from the list price given by the manufacturer to reward wholesalers and retailer for marketing functions they will perform like selling, storing, and record keeping.
Functional or trade discounts
These are price reductions given to buyers who buy goods or services out season. This type of discount is designed to help the manufacturer maintain production even during seasons of low demand.
Seasonal discount.
. These are reductions from list prices to buyers for performing some activity
Allowance
Allowances are of two types
Promotional allowance
Trade-in allowance
This is a price reduction given when a used product is part of the payment on a new product
Trade-in allowance.
This is a price reduction granted by a selier as payment for promotional services performed by buyers.
Promotional allowance.
refers to the temporary reduction of prices of a company’s products.
Promotional Pricing
Price reductions take the form of any of any of the following:
Sale
Special event pricing.
Cash rebates
Low-interest financing
Warranties and service contracts
. This is the form where the prices of the products of the firm are reduced for a limited time.
Sale
Under this form, special prices in certain seasons are made to draw in more customers.
Special event pricing.
. These are offered to customers to encourage them to make purchases within a specified time period
Cash rebates
This involves low-interest financing to customers.
Low-interest financing.
These involve adding free warranty offer or service contract
Warranties and service contracts.
refers to modifications of the basic price to accommodate differences in customer, product, and locations. The company sells its products or service at two or more prices.
Discriminatory pricing
The forms of discriminatory pricing are as follows:
Customer segment pricing
Product form pricing
Image pricing
Location pricing
Time pricing
Economists have put forward same concept in market structures of competition. The kinds of competitive situations are the following:
- pure monopoly
- oligopoly
- pure competition
- oligopsony
- monopsony
- different prices for the same product or service are charged for different customer groups
Customer segment pricing
- different product version is priced differently without considering costs.
Product form pricing
- identical product but with different images are priced at two different levels.
Image pricing
different locations are priced differently even if the cost offering each location is the same
Location pricing-
- price varied by season, day, or hour, example are telephone companies charging different rates on different rates on different days and hours
Time pricing
