Marketing Chapter 11

Customer-segment pricing

difference customers pay difference prices for the same product or service- student discount, senior citizen

Product form pricing

different versions of the product are priced differently but not according to differences in their costs- business class on flight

Price adjustment strategies

discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing, and international pricing

Introduction stage two broad pricing strategies

market-skimming pricing, market-penetration pricing

Deceptive pricing

occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers

Promotional allowance

payments or price reductions that reward dealers for participating in advertising and sales-support programs

In response to competitors lowering their price, the company can take any of 4 responses

- Reduce its price to match the competitors - Maintain tis price but raise the perceived value of its offer - Improve quality and increase price, moving its brand into a high price value position - Low-price "fighter brand" adding a lower-price item to the line or creasing a separate lower-price brand

Location-based pricing

a company charges different prices for different locations, even though the cost of offering each location is the same- out of state tuition

Time-based pricing

a firm varies its prices by the season, the month, the day, and even the hour- matinee prices

Fob-origin pricing

a geographical pricing strategy in which goods are place freed on board a carrier; the customer pays the freight from the factory to the destination

Uniform-delivered pricing

a geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location

Zone pricing

a geographical pricing strategy in which the company sets two or more zones. All customers within a zone pay the same total price; the more distance the zone, the higher the price

Basing-point pricing

a geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer

Law prohibits retail (or resale) price maintenance

a manufacturer cannot require dealers to charge a specified retail price for its product

Discount

a straight reduction in price on purchases during a stated period of time or of a large quantities; cash discount- 2/10, net 30; quantity discount, functional discount, season discount

Dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations

Product bundle pricing

combining several products and offering the bundle at a reduced price

Show rooming

compare items in the store to online

Quantity discount

price reduction to buyers who buy large volumes

Season discount

price reduction to buyers who buy merchandise or services out of season

Trade-in allowance

price reductions given for turning in an old item when buying a new one

Reference pricing

prices that buyers carry in their minds and refer to when they look at a given product

Psychological pricing

pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product; reference pricing

Product mix pricing strategies

product line pricing, optional- product pricing, captive-product pricing, by-product pricing and product bundle pricing

Allowance

promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way; trade- in allowance, promotional allowance, discount and allowance pricing

Discount and allowance pricing

reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product

Robinson-Patman Act-

seeks to prevent unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given level of trade

Segmented pricing

selling a product or service at two or more prices, where the difference in prices is not based on differences in costs, adjusting prices to allow for differences in customers, products or locations; customer-segment pricing, product form pricing, location-based pricing, time-based pricing

Predatory pricing-

selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business

Market-skimming pricing (price skimming)

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

Market-penetration pricing

setting a low price for a new product in order to attract a large number of buyers and a large market share- market must be highly price sensitive

By-product pricing

setting a price for by-products in order to make the main product's price more competitive

Captive-product pricing

setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console

Geographical strategies

setting prices for customers located in different parts of the country or world; FOB-origin pricing, uniform-delivered pricing, zone pricing, basing-point pricing, freight-absorption pricing

Product line pricing

setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices

Promotional pricing

temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

Optional-product pricing

the pricing or accessory products along with a main product

Functional discount (trade discount)

trade-channel members who perform certain functions, such as selling, storing and record keeping