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Marketing > Setting Prices > Flashcards

Setting Prices Flashcards

1
Q

Explain the concept if price elasticity if demand

A

How much demand varies with the price. Houses would be quite inelastic while bracelets would be verry elastic

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2
Q

How is price related to cost, quality and value

A

Price needs to make up for cost, quality is costly but justifies a price premium and value is the difference between the difference in worth of quality and the price

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3
Q

How do customers perceive price

A

They use well-known reference prices context and signs to determine value

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4
Q

Which are the four pricing strategies

A

Pricing premium, penetration pricing, economy pricing and price skimming

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5
Q

What is premium pricing

A

Price an offering high to indicate its distinctiveness in the market

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6
Q

Explain penetration pricing

A

Price lower than competition to gain market share

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7
Q

Explain economy pricing

A

Price bare minimum to attract sensitive buyers

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8
Q

Explain price skimming

A

Setting price high and them lower in sequential steps. Like bartering or to make it seam low in comparison to the past

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9
Q

Which are the two classical approaches when pricing new offerings

A

Price penetration and skimming

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10
Q

When should you apply market skimming

A

When you need to recover rnd costs quickly, when product lifecycle is short or when customers price sensitivity is low or unknown

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11
Q

When should you use price penetration

A

When recovering rnd costs is not pressing, customer price sensitivity is known to be high and product life cycles are long

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12
Q

Explain going rate pricing

A

Set your price based in the competition

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13
Q

What types of pricing exists in b2b

A

Geographical, negotiated, discount, value in use, relationship, pay what you want, transfer, consumer value and bid pricing strategies

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14
Q

What is show rooming

A

Chucking out something in a store and buying them cheaper online

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15
Q

What is webrooming

A

Researching products online to buy them in stores

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16
Q

Why increase price

A

It has a disproportionally good effect in profits. A study showed that 1% increase in price led to 9% greater profit as that money goes directly to net revenue.

17
Q

Does higher price mean higher quality

A

There is only a weak link

18
Q

Are consumers usually price councius

A

No, especially if they have contract free credit cards

19
Q

What is odd number pricing

A

Ending a price in nine because people have not learned to round yet

20
Q

Explain price anchoring

A

We expect prices to be what we saw first so if it becomes lower people think it is cheap

21
Q

What is pure price bundling

A

Adding some gift with a product to make the price seam reasonable

22
Q

What is mixed price bundeling

A

Offering a lower price if you buy things in a bundle than if you would buy them individually

23
Q

What are price guarantee schemes

A

Promising to match competitors cheaper prices as a statement hoping people actually dint check

24
Q

Do you have to respond in kind to a price war

A

It depends how consumers react to the price decrease. If the reaction is modest you may want to instead advertise your quality or cator more

25
Q

Explain value oriented pricing

A

To set prices where consumers see it as fair and valuable, not considering cost

26
Q

Which launch pricing strategy should you take if there is a strong threat from competitors, the product is not that differentiated, there are low barriers to entry and there are positive economics of scale

A

Market penetration

27
Q

What is surge pricing

A

To adapt prices in real time to demand

28
Q

What is loss leader pricing

A

Set a price lower than the cost to lure customers to a place where they are likely to spend

29
Q

What is promotional pricing

A

Temporarily lowering prices to increase awareness, free trial comes to mind

30
Q

Explain segmentation pricing

A

Setting different prices for different groups. Aka price discrimination

31
Q

What is customer centric pricing

A

Creating a bundle with a price catering to a specific type of customer

32
Q

What is pay what you want pricing

A

Offering an open price for publicity, often used by street musicians

33
Q

Explain free in board destination pricing

A

When the manufacturer pays for shipping but not other transportation

34
Q

What is transfer pricing

A

Prices at transfers where one party control both buyer and seller to tailor the transaction so it looks good un the books

Marketing (17 decks)

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