Week 6 - Pricing and Promotion

Question 1

The Price you charge for your product or service must be acceptable…

Answer 1

to you (the seller) maximize sales and profits

to your customer
must be competitive and perceived to have value

Question 2

Pricing Strategies Recommended for Small Business

Answer 2

Competitive Pricing (or Market-Based)
Cost Plus Pricing (or Profit-Based )
Industry Norm (or Keystone Pricing)
Premium Pricing (or Ceiling Pricing)

Question 3

The prices or range of prices that the target market accept relative to the competition

Answer 3

Competitive Pricing

Question 4

The Market Price that covers costs

Answer 4

Cost Plus Pricing

Question 5

Cost Plus Pricing Illustrated

Answer 5

Total Costs Per Unit (Material costs, Labour costs, Overhead costs) + Profit Per Unit (Estimated) = Selling Price

Question 6

Sets a price based on generally accepted industry standards such as:
Triple the cost of goods sold
Two times the labour costs
Mark up as a percentage of cost

Answer 6

Industry Norm

Question 7

Highest price the market will bear

Based on a differentiation strategy

Answer 7

Premium Pricing

Question 8

Often a combination of strategies will yield the best results!

Answer 8

Pricing Strategy For Small Business

Question 9

Pricing Strategy NOT For Small Business

Answer 9

Economy Pricing (or Limit Pricing)
Penetration Pricing
Price Skimming

Question 10

Pricing for volume sales (beat out competition)

Answer 10

Economy Pricing (Limit Pricing)

Question 11

Setting a low introductory price to increase sales volume

Raising prices after an introductory period

Answer 11

Pricing for volume sales (beat out competition)

Question 12

Start with a high price then lower as competition enters the market

Answer 12

Price Skimming

Question 13

Industry statistics
Correlation of sales
Ex) Total sales of all travel agencies divided by total # of travel agents
Customer buying intentions
Questionnaire
Expert opinion
How much business the competition gets
% of all the business out there

Answer 13

Sales Projections

Question 14

The art or science of moving the image of your business into the forefront of a prospective customer’s mind.

Answer 14

Promotion

Question 15

All the elements that you blend to maximize communication with your customer
The strategies you use in your promotional plan

Answer 15

Promotional Mix

Question 16

Promotional Mix Consideration

Answer 16

What is appropriate for your target customer?
What can you afford to spend?
What prior experience (if any) do you have with certain types of promotion?
What will give you the “biggest bang for your buck”?

Question 17

Developing a Promotional Plan Steps

Answer 17

1. Determine Sales Goal
2. State Promotional Objectives
3. Decide Upon Strategies to Achieve Objectives
4. Hash Out the Details
5. Establish the Budget
6. Method of Evaluation