week 22 - pricing Flashcards
price
money charged for product or service
why pricing importnat
only elementin mking mix directly geenrate reveneu
pricing plays key roleincreating and capturing
custoemr value
actual price in not equal to
perceievd
how does pricing link to overlal strategy
acts as communicator to customer
own prices v competitor prices
help w posoition your offering in a way consumer will fins approipriage
unless we aree luxury products ow do ew want our price to be percieved
cheaper than the actual price
what is aspirational price demand
as price goes up quantity increases too
e.g sneaker collectors , jewellrey , house s
how do we price product
start w min to produce product , istribute and promote
then goes to max , the extnet o dcustomers wilingness to pay
diff mkts have diff
maxes
waht are the 3 ways we can set price
cost
customer vlaue
competition
cost based pricing relates to what concept
production/selling
value base dpricing relates to what cnept
marketing concept
competitor based pricnig rlates to
market based approach
which generic pricing has got higher threshold of willingness to pay
value
what is cost based pricing and wahat is siles/most popular or
sell price based on costs of producing , selling and fair return for company’s effort and risk
cost plus pricing
adv of csot based pricing -3
simple to calculate
more certainty about cost than about value/demand
no adjustments to demand changes are needed
disadvantage of cost based pricing 5
fails to consider
target market
demand
competition
product life cycle - as we can charge based on this
product’s image
what is customer value based pricing
doing mkt research and audience research
capturing requiremants and value added
what are teh factors we consider in the customer’s value assessment
functinoal beenfis
social benefits
financial aspeccts
self expresive benefits
what a re the approaches to custoemr calue based pricnig 2
good value
value added
what is good value pricing
offering right combo of quality and good serivce at a fair price
what is value added pricing
attaching value added features and services to differntiate a company’s offers and charge higher prices
whats competitoor abased pricing
setting prices based on competitors stratefies , prices , csots and market offerings
what are the optinos w copm based pricing q
price lowe- cost leadership
price higher - differentiatino strat
price same - pricce matching
q to ask when doing competitor based pricing
percieved customer value of firm offerings v copmetitors offerings
current pricing strategis of competitiors and how strong are current competitors
btu whats wrong w competitor based pricing
cmop price may not affect true customer value
price could ignore production costs
danger of price wars - not viable forsmoall ppplayer
why may a small business not be able to compete w compb base dpricni
costs higher , e.g small bakeer dont got established supply chains unlike morrisons
xso charing samemena dont got money to cover costs / reinvest in busines
whats negative of cost base compared to customer value based pricing
dont find out what customers value so could be overxharging and if elastic this lower price may iuncrerase revenue which busness is missing out on
whereas capturing consumer value goives a better die as you can structure cost and pricign appopriatley
whats good about higher price - int erms of positinoinf
can position yourself as premium
what are the 7 pricing strateies
premium
freemium
penetration
skimming
product line
budnle
captive product pricing
premium pricing what goods is it to do with , what is it part of and what does it impact
luxury
higher price is part of branding and positioning
price impacts branding
freemium meaning
free product you can use extra feature to pay or it
what is penetration
low price for new product to attract large number of buyers and mkt share
in price penetration what musyt the makret be
highly price sensitive
in price penettration teh low price myst helpp
keep cmopetition out
when is mtkpenetration even more importnt e..g working conditions
mkt you unfmailiar w and established brands
must be highyl price sensitive or else why would customers switch
what is price skimming
price start high redues progressiveley
price skimming is oten related to what type of costs
high r and d ocsts
what must support high pric ein price penetration
quality and imahe
what is product loine pricing q
get poduct line w every upgrade the price incereases
what is bundle pricing
got two products and just a get a more competitive price
wheat ansoff amtrix would we use bundle priing for
penetratino
as we sellingn same things to customers just another way to repackage and offer a variety
captive product
one main product underpriced them complementary products relativley overpriced
idea is cant use main w/o complementary hence lower price and looks more appealing
e.g printers + ink
what are the two types - pay what you want
pick your price
name your price
what is pick your price
got options to choose from the seller
what is name your price
seller not obliged to set your price - you can pick price that you want
what is pay what you watn
free to use
what are the two types of segmented pricing
customer segment pricing
product form pricing
customer sement pricing
segent based on dif customers ee..g student dals ,
what is product form pricing
offering comparable product in terms of cost for different pricepoints e.g. airline
bs , econ, first class
what’s key about the difff between first class , econ
not much but consumer perception of the differnce is huge
what are the unethical (and often illegal ) pricing strategies
price discrimination
retail price maintenance
deceptive pricing
what is price discrimnation
offering same quality products to two diff price points
retail price maintenance
retailers set price manufacturers will try control price
when thtey can 0only guide not tell retailers to price
what os deceptive pricing
raise the price b4 black friday to make it look like a deal
psychology of pricing is about
price quality relationship
psychology of pricing
postiive not storng xorrelation between perceived and objective price qualityu relation
perception depends on producty type
consumers held more accurat price qualit perceptinos for non durable products than durable products e..g fast moving consumer goods
anchor pricing
price piint serves as refernce , esp when we didnt know what it was before
anchor price point is highest one and first one we see - + makes the other ones look cheaper
what kind of good does anchor pricing use
popular luxury good / when we don’t have price quality baseline
show expensive item first so everything also looks cheaper
what is charm pricing
end w 99p
but w quick perceptions brains round up to 1st number
so it looks like the 1st number
odd even pricing meaning
odd - cheaper and better dea,
even - more luxury
whole - luxury and more established
decoy item
one item don’t want you to buy and exists to guide your decision making
e.g. medium fries when compared to large looks like a bragain
what is centre stage pricing
go for middle price as don’t like stuff that is too high or too low
they want you to buy the middle thing
works well in realtil top shelf expensive low shelf cheapest middle - mmiddle pruice point
