Chapter 9 Marketing
A company has set a low price on a new product it introduced. It wants to maximize its market share and attract a large number of buyers quickly. Which new product pricing strategy should the company use?
Market-penetration pricing
____________can promote the sales of products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the package.
Price bundling
Setting the base price for a product is only the start. The company must then adjust the price to account for ____________________________ differences.
customer and situational
One price adjustment strategy is ______________________ pricing, whereby the company establishes cash, quantity, functional, or seasonal discounts, or varying types of allowances.
discount and allowance
Companies design a _______ that covers all their products
pricing structure
There are several types of product mix pricing situations, which include ______________, by-product pricing and product bundle pricing.
product line pricing, optional-product pricing, captive-product pricing
A company can use _________ by setting a low initial price to penetrate the market deeply and win a large market share.
market-penetrating pricing
When a company sets a high price as the initial price of a new product, it is pursuing a ________ new product pricing strategy.
market-skimming
In pricing innovative new products, a company can use ________ by initially setting high prices to maximize the amount of revenue from various segments of the market.
market-skimming pricing
Which of the following statements is true regarding initiating price cuts?
Cutting prices in an industry loaded with excess capacity might lead to price wars.
Dynamic pricing is when companies continually adjust prices to meet the characteristics and needs of individual customers and situations. Where is this method especially prevalent today?
Online buying
Competitors' reactions to a price change flow from a set reaction policy or ________.
a fresh analysis of each situation
Consumers will base their judgments of a product's value on the prices that competitors charge for similar products. In setting prices, companies need to consider three factors. What are the three factors?
customer perceived value, costs, and competitors' pricing strategies
The price ceiling, the maximum price a company can charge, is set by ________.
customer perceptions of the product's value
The three major pricing methods include ______.
customer value-based pricing, cost-based pricing, and competition-based pricing
Buyer reactions to price changes are influenced by the ________.
meaning customers see in the price change
Customers weigh the price of a product against the perceived values of using the product. Companies must understand concepts like _______ and ________.
price-demand relationship; consumer sensitivity to prices
Pricing is difficult because the various products have ______________ and _________________________.
related demand and costs; face different degrees of competition
Another price adjustment strategy is ______________ pricing, where the company sells a product at two or more prices to accommodate different customers, product forms, locations, or times.
segmented
What are the three major pricing strategies used by marketers?
Customer value-based pricing, cost-based pricing, and competition-based pricing
Which of the following is a potentially effective action a company could take in response to a competitor's price cut?
Increase both price and quality
Which of the following statements is true regarding how price might play an important role in helping to accomplish company objectives?
Pricing can create excitement for a brand.
What are the five product mix pricing situations?
Product line pricing, optional-product pricing, captive-product pricing, by-product pricing, and product bundle pricing
Many state colleges and universities charge one price for in-state students and a higher price for out-of-state students. Which price adjustment strategy are these schools using?
Segmented pricing
The strategy for setting a product's price often has to be changed when the product is part of _______________, which looks for a set of prices that maximizes its profits on the _______________.
a product mix; total product mix
Printer companies often charge a fairly low price for their ink jet printers (relative to costs) and a high price for replacement cartridges. These companies are using a strategy of ________ pricing.
captive-product
Value-based pricing begins with analyzing ___________.
consumer needs and value perceptions, and the price is set to match perceived value
Companies apply a variety of price adjustment strategies to account for differences in ___________________.
consumer segments and situations
Companies facing or anticipating a competitor's price change may take one or more actions, which include sitting tight, reducing their own price, raising perceived quality, _______________________________.
improving quality and raising prices, or launching a fighting brand
Economic conditions can have a major impact on pricing decisions. Marketers have responded by _________.
increasing their emphasis on value-for-the-money pricing strategies
Pricing strategies usually change as a product passes through its life cycle but are especially challenging during the _______ stage.
introductory
External pricing considerations include ________________________________ such as the economy, reseller needs, and government actions.
the nature of the market and demand and environmental factors
Other internal factors that influence pricing decisions include ____________.
the company's overall marketing strategy, objectives, and marketing mix, as well as organizational considerations
Internal factors that affect pricing include ________.
the company's overall marketing strategy, objectives, marketing mix, and other organizational considerations.
The company that faces a price change initiated by a competitor must try to understand the ________ as well as the _______.
competitor's intent; likely duration and impact of the change
Product costs set the floor for a product's price. If the company prices the product below its costs, the company's profits will suffer. In setting its price between these two extremes, the company must consider several external and internal factors, including ________.
competitors' strategies and prices, the overall marketing strategy and mix, and the nature of the market and demand