Chapter 11 Flashcards
(26 cards)
Market Skimming pricing
Sets high initial prices to “skim” revenue layers from the market
Market-penetration pricing
Setting a low price for a new product to attract buyers and a large market share.
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.
- Airplane business class, comfort class, economy class, etc
Optional-product pricing
Optional or accessory products along with the main product
- Airpods for the iphone
Captive Product Pricing
Prices of products that must be used along with the main product
- Content for the kindle or E-readers
By-Product pricing
Price for by-products in order to make the price more competitive
Product bundle pricing
Combines several products at a reduced price
- Mcdonalds combo or bundle
Discount
A straight reduction in price on purchases during a sted period of time or of larger quantities.
Allowance
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way.
Segmented Pricing
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
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 prices
Prices that buyers carry in their minds and refer to when they look at a given product.
Promotional pricing
Temporarily pricing products below the list price to increase short-run sales
Geographical pricing
Setting prices for customers located in different parts of the country or world.
FOB-origin
(free on board) pricing is 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
This is a geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.
Zone pricing
This is a strategy in which the company sets up two or more zones where customers within a given zone pay the same price.
Basing-point pricing
means that a seller selects a given city as a “basing point” and charges all customers the freight cost from that city to the customer.
Freight-absorption pricing
This is a strategy in which the seller absorbs all or part of the freight charges in order to get the desired business.
Dynamic pricing
This involves adjusting prices continually to meet the characteristics and needs of individual customers and situations
International pricing
sets prices in a specific country based on
Economic conditions
Competitive situations
Laws and regulations
Wholesaling and retail
Price fixing
Legislation requires sellers to set prices without talking to competitors.
Predatory pricing
The legislation prohibits selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business.
Price discrimination
This is allowed if the seller: can prove that costs differ when selling to different retailers.
