Mizzou Marketing 3000 Poor Chapter 9
Location pricing
A company charges different prices for different locations, even though the cost of offering each location is the same
Price skimming
A firm charges the highest price possible that buyers who most desire the product will pay
Time pricing
A firm varies its prices by the season, the month, the day, and even the hour
FOB-origin pricing
A practice that means the goods are placed free on board a carrier
Quantity discount
A price reduction to buyers who buy large volumes
Cash discount
A price reduction to buyers who pay their bills promptly
Online Pricing Using Artificial Intelligence - 2
Accumulating asymmetric information
2/10, net 30
Although payment is due within 30 days, the buyer can deduct 2 percent if the bill is paid within 10 days
Setting Pricing Policy - 4th step
Analyzing competitors, costs, prices, and offers
Why are firms limited in what price they can set?
Because of the availability of similar competitive offerings
What do short-term pricing objectives center on?
Competition
Setting Pricing Policy - 2nd step
Determining demand
Customer-segment pricing
Different customers pay different prices for the same product or service
Product form pricing
Different variations of the product are priced differently but not according to differences in their costs.
2nd Product Characteristic of Existing Products
Distinctiveness
Online Pricing Using Artificial Intelligence - 3
Estimating 'Willingness to Pay'
Setting Pricing Policy - 3rd step
Estimating costs
Zone pricing
Falls between FOB-origin pricing and uniform-delivered pricing. The company sets up two or more zones. All customers within a given zone pay a single total price; the more distant the zone, the higher the price.
Noncumulative quantity discount
Given for a single purchase (buy three get one free)
Price Elasticity (Penetration and Skimming strategies)
High Penetration and Low Skimming
Entry Barriers (Penetration and Skimming strategies)
Low Penetration and High Skimming
Technological Change (Penetration and Skimming strategies)
Low Penetration and High Skimming
What is often preferred when penetrating new markets or reducing excess inventory?
Marginal cost coverage
4th Product Objective
Market Share Goals
What is the goal of AI systems?
Maximize profit
3rd Product Characteristic of Existing Products
Nature of Competition
Functional discount
Offered by the seller to trade-channel members who perform certain functions, such as selling, storing, and record keeping
Promotional allowances
Payments or price reductions that reward dealers for participating in advertising and sales support programs
When demand is elastic, what strategy may be used?
Penetration pricing
1st Product Characteristic of Existing Products
Perishability
What are price perceptions linked to?
Positioning perceptions
Online Pricing Using Artificial Intelligence - 1
Predicting market demand and micro-segmentation
Standards Issue (Penetration and Skimming strategies)
Present Penetration and Absent Skimming
Trade-in allowances
Price reductions given for turning in an old item when buying a new one
When demand is inelastic, what strategy may be used?
Price skimming
Transfer prices
Prices set determining the cost of products shipped between headquarters and foreign subsidiaries
Reference prices
Prices that buyers carry in their minds and refer to when they look at a given product
Penetration pricing
Pricing lower than competition
Loss leaders
Products priced below cost
3rd Product Objective
Profit Goals
What do financial objectives involve?
Profit or some other desirable financial target
Countertrade
Receiving payment for goods sold in some form other than cash
1st Product Objective
Segmentation and Positioning
Setting Pricing Policy - 5th step
Selecting a pricing method
Setting Pricing Policy - 6th step
Selecting final price
Setting Pricing Policy - 1st step
Selecting the pricing objective
Price skimming
Set price high to achieve quick.large profits
Penetration pricing
Set price low to gain immediate sales/market share, scare off competitive entry
Online Pricing Using Artificial Intelligence - 4
Shaping demand
2nd Product Objective
Signal of product quality
5th Product Objective
Social Responsibility
Uniform-delivered pricing
The opposite of FOB pricing
What is price?
The value placed on what is exchanged
System prices
Those set on the sale of turnkey operations or a total systems package that includes some assortment of bundled products and services
AI Micro-segmentation
Uses customers attributes/behaviors to divide customers into segments
Cumulative quantity discount
When a discount is given over a number of purchases/over time
Are prices in foreign markets generally higher than those at home?
Yes
Reinforcement learning
aAsubset of machine learning that uses penalties and rewards to incentivize an AI agent toward a specific goal
Markup price =
unit cost/(1-desired return on sales)
Unit Cost =
unit variable cost + (fixed costs/unit sales)
