Value Through Pricing - Chapter 12

Question 1

competitive bidding

Answer 1

drawing up detailed specifications for a product and putting the contract out to tender

Question 2

direct-cost pricing

Answer 2

the calculation of only those costs that are likely to rise as output increases

Question 3

economic value to the customer (EVC)

Answer 3

the amount a customer would have to pay to make the total lifecycle costs of a new and a reference product the same

Question 4

full-cost pricing

Answer 4

pricing so as to include all the costs and based on certain sales volume assumptions

Question 5

going-rate pricing

Answer 5

pricing at the rate generally applicable in the market, focusing on competitor’s offerings rather than on company costs

Question 6

market-orientated pricing

Answer 6

an approach to pricing that takes a range of marketing factors into account when setting prices

Question 7

positioning strategy

Answer 7

the choice of target market (where the company wishes to compete) and differential advantage (how the company wishes to compete)

Question 8

price unbundling

Answer 8

pricing each element in the offering so that the price of the total product package is raised

Question 9

price waterfall

Answer 9

the difference between list price and realised or transaction price

Question 10

trade-off analysis

Answer 10

a measure of the trade-off customers make between price and other product preference can be established