Week 7 Flashcards
1
Q
What is price?
A
- Price is the value exchanged for a product in a marketing transaction
2
Q
What are the objectives of pricing?
A
- Profitability
- Ongoing survival (long‐term prosperity)
- Market‐share leadership
- Positioning
3
Q
What are the bases of pricing?
A
- Value-based Pricing: Organisation should select a price that reflects the value of a product to the customer
- Cost-based Pricing: Organisation should also ensure the value obtained from the marketing exchange can cover the costs
- Competition-based Pricing: Competition offerings are crucial in pricing decisions.Organisations must make pricing decisions to make their products competitive in the marketplace
4
Q
Distinguish between a price ceiling and a price floor
A
- Price ceiling → value of the product to the customer
- Price floor → a minimum price that must be charged to cover costs
5
Q
How are new products priced?
A
- Penetration pricing → a pricing tactic based on setting a low price in order to gain rapid market share and turnover for a new product
- Price skimming → charging the highest price that customers who most desire the product are willing to pay, and then later lowering the price to bring in larger numbers of buyers
6
Q
What is psychological pricing?
A
- Pricing that attempts to influence a customer’s perception of price to make a product’s price more attractive
7
Q
What are the different types of psychological pricing?
A
- Odd-even pricing
- Reference pricing
- Multiple-unit pricing
- Bundle pricing
8
Q
What is odd-even pricing?
A
- The use of idiosyncratic prices to attract attention and create the perception that the price is discounted
9
Q
What is referencing pricing?
A
- Pricing a product at a moderate level and positioning it next to a more expensive model
10
Q
What is multiple-unit pricing?
A
- Multiple units of a product are sold for a single price, usually significantly lower per unit than the individual price
11
Q
What is bundle pricing?
A
- Setting a combination of complementary products for a single price, which is less than the sum of the individual product prices
