Marketing Chapter 9

What is value added pricing?

Attaching value added features and services to differentiate a company's offers while charging higher prices

What is a few examples of discount pricing?

Cash Discount, Seasonal Discount, Quantity Discount, functional discount (trade channel members) Trade in allowances, Promotional Allowances

What is Captive Product Pricing?

Companies that make products that must be uses along with the main product.

Why are there price adjustment strategies?

Companies usually adjust their prices to account for various customer differences and changing situations.

What is the process for customer value based pricing?

Company first assess customer needs and value perceptions. it then sets the target price based on customer perceptions of value. The targeted value and price drive decisions about what costs can be incurred and the resulting product design.

Under geographical pricing, what is zone pricing?

Company sets up two or more zones and freight depends on which zone the customer is in.

What is dynamic pricing?

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

What are the 2 traditional based pricing strategies and briefly explain?

Cost based pricing - Calculate cost and add markup to determine price Competition based pricing - Look at what competitors are doing

What are the forms of segmented pricing?

Customer segment pricing - Ex. Senior citizens, students Product Form - Different versions of product are priced differently Location based pricing - Different prices for different locations (In state, out of state) Time based pricing - Matinees how, evening show

Under geographical pricing, what is FOB origin pricing?

Customer spay for shipping

What is the main point is regards to "value" in this chapter?

Customers must believe that the value delivered is greater than the price before they will buy.

What is an important type of good-value pricing?

Everyday Low Price (EDLP)

What are the two types of costs?

Fixed Costs and Variable Costs

What are the two types of value based pricing?

Good-value pricing and value added pricing

What is high low prices?

Having high prices on a everyday basis and then lowering costs through sales or promotions on certain days.

What are segmented pricing?

In segmented pricing, the company sells the same products at 2 or more different prices and the differences are not based on costs.

Give an example of good value pricing

Many companies are now offering less expensive versions of established, brand name products. For example, McDonalds has the dollar menu.

What are two broad pricing strategies used when companies bring out a new product?

Market Skimming Pricing and Market Penetration Pricing

What has changed in companies actions since the great recession?

More and more are adopting good value pricing.

What is good value pricing?

Offering the right value of quality and good service at a fair price.

What is Optional Product Pricing?

Offering to sell optional or accessory products along with the main product.

What is psychological pricing?

One that considers that psychology of the product, not simply the economics.

Within public policy and pricing, what do you have to protect consumers from?

Price Discrimination Price Maintenance - manufacturer cant require dealers to charge a certain price Deceptive pricing - sellers states misleading price to customers...says its a high price then has sale.

Within public policy and pricing, what do you have to protect competitors from?

Price Fixing while talking to competitors Predatory Pricing

What is a broader definition of price?

Price is all of the values that a customer has to give up in order to receive the benefits of a product or service.

What is an adverse effect of promotional pricing?

Price promotions can create "deal-prone" customers who wait until brands go on sale before buying them . Also, companies should be vary of frequent and deep price cuts during bad times.

What are some characteristics of prices?

Pricing is flexible and the only one that represents a source of revenue in the marketing mix

What are the 5 Product Mix Pricing Strategies?

Product Line Pricing Optional Product Pricing Captive Product Pricing By-product pricing Product Bundle Pricing

Market Skimming only makes sense under a few conditions? What are these conditions?

Product quality and image must first support the price and enough buyers must want the product at that price. The costs of producing a smaller volume can't be so high that they cancel the advantage the charging more. Lastly, competitors should not be able to enter the market and undercut the price.

What is another aspect of psychological pricing?

Reference Pricing. Putting a two high priced products next to each other but one is a cheaper than the other and it makes it look way more affordable.

Under geographical pricing, what is Uniform-delivered pricing?

Same price plus freight to all customers regardless of location

Under geographical pricing, what is freight absorption pricing?

Seller absorbs all or part of the actual freight charges to get the desires business.

Under geographical pricing, what is basing-point pricing?

Seller selects a city as a basing point and charges all customers the freight cost from that city to the customers location.

What is Product Bundle Pricing?

Sellers often combine several products and offer the bundle at a reduced price.

What is by-product pricing?

Setting a price for by products to make the main products price more competitive.

What is product line pricing and what are the steps based on?

Setting the price steps between various products in a product line. The price steps are based on cost differences between products, customer values of different features, and competitors prices.

What do smart managers use price as?

Smart managers treat pricing a key strategic tool to capture customer value

What is the key for customer value based pricing?

The key is using the buyers perception of value as the key to pricing

What are some conditions for Market Penetration to work?

The market must first be highly price sensitive. Production and distribution must decrease as sales volume increases. Low price must keep out competition.

What is Market Skimming Pricing?

This is when high initial prices are set and then gradually decreased to skim revenues layer by layer from the market. Apple frequently uses this strategy.

What is Market Penetration Pricing?

This is when the company sets low initial price to penetrate the market and attract a large number of buyers quickly and win a large market share. The high sales volume results in falling costs.

What are some key points to the "value" slide

What is being sold must be defined - Financial Value - Emotional Value