Marketing Chapter 11 (Pricing Strategies)

Discount allowances

Discounting based off quantity, function, season, or by offering cash back

Price Skimming

Pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.

Optional product pricing

Pricing strategy where companies will attempt to increase the amount customer spend once they start to buy.

By-product pricing

Setting a price for by-products in order to make the main product's price more competitive. (i.e. selling unused meat as dog food)

Promotional Pricing

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

Dynamic Pricing

The practice of changing prices for products and services in real time in response to supply and demand conditions.

Penetration Pricing

The practice of offering a low price for a new product or service during its initial offering in order to attract customers away from competitors.

Product line pricing

The practice of reviewing and setting prices for multiple products that a company offers in coordination with one another.

Retail price maintenance

When a manufacturer requires a dealer to charge a specific retail price for its products.

Geographic pricing

When prices are quoted in terms of reductions or increases based on transportation costs or the actual physical distance between the seller and the buyer

International Pricing

When prices are set in a specific country based on country-specific factors.

Product bundle pricing

combining several products and offering the bundle at a reduced price

Reference prices

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

Segmented pricing

selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

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