To Know About Pricing Flashcards
The sum of everything the customer gives up for having and using the product
Price
Customer cost
Examples of price (customer cost)
Time Inconvenience Travel Delivery Installation Training Opportunity Cost
Pricing that focuses on customer perceptions of value
Value based pricing
Two pricing approaches
Cost based pricing
Competition based pricing
Calculate cost, add markup to get price
Cost-based pricing
Look at what competition is doing, copy it to get price
Competition based pricing
No demand above this price
Price ceiling
No profit below this price
Price floor
The cost of the product represents what kind of price
Price floor bc no profit if selling product below the cost of the product
Two products that represent market penetration
Dell
Walmart
New product innovation is related to what kind of pricing
Market skimming pricing
Examples of market skimming pricing
High tech
Luxury items
Price related to the value of the good is the
Maximum price (price ceiling) bc customers have no desire to buy product who’s price is higher than they value it at (no demand above it)
When customers are price sensitive, what kind of pricing is used
Market penetration
When production costs decrease with production, what kind of pricing is used
Market penetration pricing
When low price keeps out competition, what kind of pricing is used
Market penetration pricing
When the company can maintain a low price position (still making profit) this is
Market penetration pricing
Apple: As they go up in features, it goes up in pricing such as with the different iPhones and MacBooks; this is an example of
Product-line pricing
Colorful keyboard covers are sold for laptops and they aren’t necessary for the product (the laptop) to work
Optional-product pricing
Game consoles and the games and the controller; prescription lens and frames; razor and the cartridge are all examples of
Captive product pricing (you need to buy the accessories to work the product )
Discount for buying more; buy the whole thing and it’s a little cheaper than buying the individual parts is an example of what
Product bundle pricing
Bucket of Zoo Doo, scrap metal etc are examples of
By-product pricing (capitalizing o something that would have been a by-product or thrown away
Buying ahead with cash and receiving a discount or there being an extra price to pay for paying with card and not cash is an example of
Cash discount pricing
When the price is discounted because it’s good for you and good for me that is
Functional discount pricing
When you buy more and get a discount this is
Quantity discount pricing
When you get a discount for buying things after the season this is
Seasonal discount pricing
Four types of segmented pricing
Customer-segment
product-form
Location
Time
A McDonald’s value meal being more expensive at LAX airport is an example of
Location segmented pricing
When delivery gets more expensive when you’re farther away, this is an example of
Geographical pricing (NOT SEGMENTED)
This kind of pricing fluctuates based on supply and demand; for instance products on amazon, airplane tickets etc.
Dynamic pricing
Promotion mix pricing strategies (5)
Product line pricing Optional product pricing Captive product pricing By-product pricing Product bundle pricing
Price adjustment strategies (6)
Discount pricing Segmented pricing Psychological pricing Promotional pricing Geographical pricing Dynamic pricing
A product that gets consumers into the store (it’s a frequent and inexpensive purchase)
Loss leader
What kind of price adjustment strategies is used for loss leaders
Promotional pricing
When you’re at the movies and a cheaper price is offered for kids or seniors this is an example of
Customer-segmented pricing
The difference between 2D, 3D and IMAX is an example of
Product form segmented pricing
The price of Movie tickets in Manhattan vs movie tickets in state college is an example of
Location segmented pricing
Matinee is cheaper is an example of
Time segmented pricing
A price ending in what number doesn’t help sales because it’s angular and jarring?
7
Relative reference pricing of video game target and Best Buy vs. laptop at Best Buy and Office Depot is an example of
Psychological pricing
Price ending in 9 is thought of as a
Bargain
A price ending in 8 is thought of as a
Bigger bargain and soothing
A price ending in 00 is thought of as
Higher quality
Three things about value
Must define what is being sold
Financial value
Emotional value
Cost saving and earnings opportunities are examples of
Financial value
Status, safety and a sense of belonging are example of
Emotional value (maslows hierarchy)
McDonald sign commercial
Public policy protects competitors from what two things
Price fixing
Predatory pricing
Talking with competitors to set prices is
Price fixing
Selling below cost with the intention of punishing a competitor or putting them out of business is
Predatory pricing
Public policy protects consumers from what three things
Price discrimination
Price maintenance
Deceptive pricing
Ensure same price to customers at given level of trade
Price discrimination
Requiring dealers to charge s specified retail price
Price maintenance
Seller stated price that may mislead customers
Deceptive pricing
