Chapter 16

F.O.B.

- "free on board" some vehicle at some place

Why are market share objectives are popular?

- Easier to measure - A company with long term goals will aim for this

Sale price - Is? Giving up?

- a temporary discount from the list price. - Give up the convenience of buying when they want to but when the seller wants to sell

Price policies lead to... It is difficult to? Who sets the price?

- administered prices - consciously set prices - administer prices throughout the channel - Managers should administer their prices bc customers must be willing to pay the prices

Price fixing

- competitors getting together to raise, lower, or stabilize prices, common and easy - IILEGAL in the US

Seasonal discounts-

- discounts offered to encourage buyers to buy earlier than present demand requires.

Quantity discounts? Why do this? Two types?

- discounts offered to encourage customers to buy in larger amounts - Get more of buyer's business, shifts some of storing function to the buyer, reduces shipping and selling costs - 1. Cumulative quantity discounts - apply to purchases over a given period and the discount usually increases the as the amount purchased increases - 2. Noncumulative quantity discounts - apply only to individual orders.

Status quo objectives? Status quo objective may be part of? nonprice competition?

- don't rock the pricing boat objectives - aggressive overall marketing strategy - aggressive action on one or more of the Ps other than Price.

Uniform delivered pricing: Is? Used when?

- making an average freight charge to all buyers. - Transportation costs are relatively low - The seller wished to sell in all geographic areas at one price

Net

- payment for the face value of the invoice is due immediately.

Phony list prices? Wheeler lea amendment?

- prices consumers are shown to suggest that the price has been discounted from list. - bans "unfair or deceptive acts in commerce"

Dynamic pricing offers:

- products at a price that changes according to the level of demand, the type of customer, or state of the weather.

Unfair trade practice acts: Is? Required to?

- put a lower limit on prices, especially at the wholesale and retail levels. - Wholesalers usually required to take certain minimum % markup over their merchandise plus transportation costs

Sales oriented objectives - Is? Sales growth doesn't mean?

- seeks some level of unit sales, dollar sales, or share of the market - without referring to profit. - big profits

Profit maximization objective? Doesn't mean?

- seeks to get much profit as possible - Doesn't mean high prices

Target return objective- Is? Usually stated as? How to see performance?

- sets a specific level of profit as an objective -Often stated as a % of sales or return on investment -Performance can be compared with the objective

Push money (or price money) allowances: Is? Used for what type of products?

- sometimes called PMs or spiffs, are given to retailers by manufacturers or wholesalers to pass on to the retailers' salesclerks for aggressively selling certain items. - Used for new items, slower moving items, higher margin items

Introductory price dealing Is? Price change when? Goal?

- temporary price cuts to speed new products into a market. - Plan is to raise price after introductory phase - Get target customers convinced to buy again

Skimming price policy: Used when? Price is changed how? Pros?

- tries to sell the top of the demand curve at a high price before aiming at more price-sensitive customers. - Used when you don't know the demand curve or can be used in introductory stages - Involves slow reduction in price overtime - Can quickly reinvest

Penetration pricing policy Is? Used for what market? Pros?

- tries to sell the whole market at one low price -Used when elite market - those willing to pay high price- is small - Large quantities results in economies of scale

Flexible- price policy: Is? When do firms start to use this? What firms use this?

-offering the same product and quantities to different customers at different prices - As firms learn to analyze big data start to shift to flexible price policy - Most common in channels, direct sales of business products, and at retail for expensive shopping products

Robinson Patman Act - (of 1936) - Is? Some price differences are allowed if?

Patman Act - (of 1936) makes illegal any price discrimination - selling the same products to different buyers at different prices - if it injures competition. - cost differences and they need to meet competition? - are not of the same "grade and quality" (FTC says if physical characteristics are similar than they are of the same like grade and quality)

Trade (functional) discount

a list price reduction given to channel members for the job they are going to do.

FOB shipping point

buyer pays the shipping

Allowances

discounts, are given to final consumers, business customers, or channel members for doing something or accepting less of something

Control minimum price which products are imported with what?

dumping laws- pricing a product sold in a foreign market below the cost of producing it or at a price lower than its domestic market.

Zone pricing

making an average freight charge to all buyers within specific geographic areas.

Freight absorption pricing-

means absorbing freight cost so that a firm's delivered price meets that of the nearest competitor.

One price policy

offering the price to all customers who purchase products under essentially the same conditions and in the same quantities - majority of firms use this

Trade in allowances -

price reduction given for used products when similar products are bought.

Advertising allowances

price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier's products locally.

Discounts

reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves.

Cash discounts

reductions in price to encourage buyers to pay their bills quickly.

Rebates -

refunds paid to consumers after purchase.

FOB destination

seller pays shipping costs and any damage that may occur

Value pricing - Value pricers-

setting a fair price level for a marketing mix that really gives the target market superior customer value. -These companies build relationships with their customers - Value pricers define the target market and competition

Everyday low pricing

setting a low list price rather than relying on frequent sales, discounts, or allowances.

Stocking allowances

sometimes called slotting allowances ,are given to an intermediary to get shelf space for a product.

Price

the amount of money charged for "something of value"

2/10, net 30

the buyer can take a 2% discount the face value of the invoice if the invoice is paid within 10 days. Otherwise due within 30 minutes

Basic list prices

the prices final customers or users are normally asked to pay for products

Pricing objectives should be explicitly stated because

they have direct effect on pricing policies