Marketing Chapter 11
Customer-segment pricing
difference customers pay difference prices for the same product or service- student discount, senior citizen
Product form pricing
different versions of the product are priced differently but not according to differences in their costs- business class on flight
Price adjustment strategies
discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing, and international pricing
Introduction stage two broad pricing strategies
market-skimming pricing, market-penetration pricing
Deceptive pricing
occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers
Promotional allowance
payments or price reductions that reward dealers for participating in advertising and sales-support programs
In response to competitors lowering their price, the company can take any of 4 responses
- Reduce its price to match the competitors - Maintain tis price but raise the perceived value of its offer - Improve quality and increase price, moving its brand into a high price value position - Low-price "fighter brand" adding a lower-price item to the line or creasing a separate lower-price brand
Location-based pricing
a company charges different prices for different locations, even though the cost of offering each location is the same- out of state tuition
Time-based pricing
a firm varies its prices by the season, the month, the day, and even the hour- matinee prices
Fob-origin pricing
a geographical pricing strategy in which goods are place freed 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 two or more zones. All customers within a zone pay the same total price; the more distance the zone, the higher the price
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
Law prohibits retail (or resale) price maintenance
a manufacturer cannot require dealers to charge a specified retail price for its product
Discount
a straight reduction in price on purchases during a stated period of time or of a large quantities; cash discount- 2/10, net 30; quantity discount, functional discount, season discount
Dynamic pricing
adjusting prices continually to meet the characteristics and needs of individual customers and situations
Product bundle pricing
combining several products and offering the bundle at a reduced price
Show rooming
compare items in the store to online
Quantity discount
price reduction to buyers who buy large volumes
Season discount
price reduction to buyers who buy merchandise or services out of season
Trade-in allowance
price reductions given for turning in an old item when buying a new one
Reference pricing
prices that buyers carry in their minds and refer to when they look at a given product
Psychological pricing
pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product; reference pricing
Product mix pricing strategies
product line pricing, optional- product pricing, captive-product pricing, by-product pricing and product bundle pricing
Allowance
promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way; trade- in allowance, promotional allowance, discount and allowance pricing
Discount and allowance pricing
reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product
Robinson-Patman Act-
seeks to prevent unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given level of trade
Segmented pricing
selling a product or service at two or more prices, where the difference in prices is not based on differences in costs, adjusting prices to allow for differences in customers, products or locations; customer-segment pricing, product form pricing, location-based pricing, time-based pricing
Predatory pricing-
selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business
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
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- market must be highly price sensitive
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 video-game console
Geographical strategies
setting prices for customers located in different parts of the country or world; FOB-origin pricing, uniform-delivered pricing, zone pricing, basing-point pricing, freight-absorption pricing
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
Promotional pricing
temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales
Optional-product pricing
the pricing or accessory products along with a main product
Functional discount (trade discount)
trade-channel members who perform certain functions, such as selling, storing and record keeping
