Marketing Chapter 11

Marketing Skimming Pricing

A strategy with high initial prices to skim maximum revenues from the segments willing to pay the high price

Cost Plus Pricing

Adds a standard mark-up to the cost of the product

Dynamic Pricing

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

International Pricing

Adjusting prices for international markets

Geographical Pricing

Adjusting prices to account for geographical location of customers

Segmented Pricing

Adjusting prices to allow for difference in customers, products or locations

Psychological Pricing

Adjusting prices to psychological effect

Value Based Pricing (1)

Assess customer needs and value perceptions

Value Added Pricing

Attaching value added features and services to differentiate a company's offerings and charging high prices

Product Bundle Pricing

Combines several products at a reduced prices

Cost Based Pricing (4)

Convince buyers of products value

Cost Based Pricing (1)

Design a good product

Value Based Pricing (4)

Design product to deliver desired value at target price

Value Based Pricing (3)

Determine costs that can be incurred

Cost Based Pricing (2)

Determine product costs

Captive Product Pricing

Involved products that must be used along with the main product

Two Part Pricing

Involves breaking the price into: fixed fee, variable usage fee

Cost Based Pricing

Involves setting prices based on the costs for producing, distributing and selling the product plus a fair rate of return for its effort and risk

Good Value Pricing

Offering just the right combination of quality and good service at a fair price

Discount and Allowance Pricing

Reducing prices to reward customer responses such as paying early or promoting the product

By Product Pricing

Refers to products with little or no value produced as a result of the main product

Cost Based Pricing (3)

Set price based on cost

Value Based Pricing (2)

Set target price to match customer perceived value

Marketing Penetration Pricing

Sets a low initial price in order to attract a large number of buyers and large market share

Optional Product Pricing

Takes into account optional or accessory products along with the main product

Product Line Pricing

Takes into account the cost difference between products in the line, customer evaluation of their features and competitors pricing

Promotional Pricing

Temporarily reducing prices to increase shot run sales

Fixed Costs

The costs that do not vary with production or sales level

Variable Costs

The costs that vary with the level or production

Target Profit Pricing

The price at which the firm will break even or make the profit it's seeking

Break Even Pricing

The price at which total costs are equal to total revenue and there is no profit

Total Costs

The sum of the fixed and variable costs for any given level of production

Value Based Pricing

Uses the buyer' perceptions of value, not the seller's cost, as the key to pricing