chapter 9 Flashcards
Price
amount of money charged for price or service
Good pricing starts with customers and their perceptions of value
Consumer Value-based Pricing
Customer value-based pricing uses buyers’ perceptions of value as the key to pricing. Value-based pricing means that the marketer cannot design a product and marketing program and then set the price. Price is considered along with all other marketing mix variables before the marketing program is set.
Cost based pricing
Creating a good product, finding cost based on production, convincing consumer it is worth the cost.
Good-Value Pricing
Offering quality and good service for lower price. EX) Mercedes offering CLA Coupes.
Value Adding Strategy
Adding more luxury pricing and amenities to keep price lower for other budget spenders
Target Costing
starts with an ideal selling price based on customer value considerations and then targets costs that will ensure that the price is met
Non-price Positioning
Very luxury items that use high quality materials and charge a luxury price
commodity
Useful and in abundance like food or water
Market skimming pricing
Starting the price high to set perceived value of product, then lowering the product as time goes on to gather a larger consumer base.
EX) Apple
First, the product’s quality and image must support its higher price, and enough buyers must want the product at that price. Second, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Finally, competitors should not be able to enter the market easily and undercut the high price.
Market penetration Pricing
Setting the price low for a product to gain large market share.
First, the market must be highly price sensitive so that a low price produces more market growth. Second, production and distribution costs must decrease as sales volume increases. Finally, the low price must help keep out the competition, and the penetration pricer must maintain its low-price position.
Product line pricing
Setting the prices across an entire product line
Optional-product pricing
Offering additional product accessories to product.
EX) apple: more gigs
EX) Car: Limited features
Captive-Product Pricing
Additional products that must be used with initial products.
EX) Kroger coffee cups
By-Product Pricing
Selling off by products
Discount and allowance pricing
Reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product
Segmented pricing
Pricing is different based on location, customers and products .Museums and movie theaters, for example, may charge a lower admission for students and senior citizens. Under product form pricing, different versions of the product are priced differently but not according to differences in their costs. For instance, a round-trip economy seat on a flight from New York to London might cost $1,100, whereas a business-class seat on the same flight might cost $3,400 or more.
Psychological Pricing
Adjusting price for psychological effect.
When they can judge the quality of a product by examining it or by calling on past experience with it, they use price less to judge quality. But when they cannot judge quality because they lack the information or skill, price becomes an important quality signal.
Geographical Pricing
Setting price based on geography location. Usually shipping costs.
Dynamic Pricing
Adjusting prices continually to meet the characteristics and needs of individual customers and situations
