Pricing strategies

Retail price maintenance

when a manufacturer requires a dealer to charge a specific retail price for its products (ILLEGAL)

Robinson-Patman Act

1937 - Amended federal anti-trust laws so as to outlaw "price discrimination," whereby companies create a monopolistic network of related suppliers and vendors who give each other more favorable prices than they do others.

FOB-origin pricing

A geographical pricing strategy in which goods are placed free 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 up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price

freight-absorption pricing

A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business

Discount

A straight reduction in price on purchases during a stated period of time or of larger quantities

Scanner Fraud

A type of deceptive pricing when a retailer advertises a lower price in the newspaper but does not change the price in its computer system

Product bundle pricing

Combining several products and offering the bundle at a reduced price

Price adjustment startegies

Discount and Allowance pricing, segmented pricing, psychological pricing, promo pricing, geographical pricing, dynamic pricing, and international pricing

Allowance

Promotional money payed by manufactures to retailers in return for an agreement to feature the manufactures products in some way

New Product pricing strategies

Market Penetration, Market Skimming

Psychological pricing

Pricing that attempts to influence a customer's perception of price to make a product's price more attractive

product mix pricing strategies

Product Line Pricing, Optional Product Pricing, Captive Product Pricing, By-Product Pricing, Product Bundle Pricing

Deceptive Pricing

The pricing of goods and services in such a way as to cause a customer to be misled; an example of deceptive pricing is bait-and-switch (ILLEGAL)

Segmented Pricing

Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs Ex. Movie tickets (students, senior citizens)

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 Ex. Apple Iphones Start @ $599 are now $99 for a 8GB

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 Ex. IKEA

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

VALS

Understanding customers is critical to marketing. VALS™ strengthens demographic characterizations by explaining the deeper psychological drivers of consumer behavior.

Bait-and-Switch

a deceptive way of selling that involves advertising a product at a very low price in order to attract customers who are then persuaded to switch to a more expensive product

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

Dynamic Pricing

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

Price-fixing

agreeing to charge the same or similar prices for a product

strivers

are concerned about the opinions and approval of others. Money defines success for them

Believers

are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation.

Thinkers

are motivated by ideals. They are mature, satisfied, comfortable, and reflective people who value order, knowledge, and responsibility.

Makers

are motivated by self-expression. They express themselves and experience the world by working on it—building a house, raising children, fixing a car, or canning vegetables—and have enough skill and energy to carry out their projects successfully.

Experiencers

are motivated by self-expression. Young, enthusiastic, and impulsive consumers, they are quickly become enthusiastic about new possibilities but are equally quick to cool.

Innovators

are successful, sophisticated, take-charge people with high self-esteem.

achievers

have goal-oriented lifestyles and a deep commitment to career and family.

Survivors

live narrowly focused lives. Because they have few resources with which to cope, they often believe that the world is changing too quickly.

Reference prices

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

Predatory Pricing

selling a product below cost to drive competitors out of the market

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 videogame console

Geographical Pricing

setting prices for customers located in different parts of the country or world

Promotional Pricing

temporary pricing a product or service below list price or below cost in order to attract short run sales

Price Discrimination

the business practice of selling the same good at different prices to different customers (ILLEGAL)

Optional Product Pricing

the pricing of optional or accessory products along with a main product Ex. Refrigerator (Ice machine)