Deck 10 - Pricing - Lecture 11

Question 1

what is price

Answer 1

price is a measure of value to both buyers and sellers

Question 2

what is pricing

Answer 2

pricing is the management of price

Question 3

what does price seeking mean

Answer 3

higher price = higher quality

Question 4

what does price averse mean

Answer 4

lower price = greater value

Question 5

what does cost represent

Answer 5

cost represents the total money, time and resources sacrificed to produce or acquire an offering

Question 6

is the cost for the buyer just the price

Answer 6

the cost for the buyer can be greater than price (time spent researching etc)

Question 7

what types of cost need to be factored in for the seller when pricing a product

Answer 7

fixed, variable and indirect costs

Question 8

what does the product life cycle diagram look like

Answer 8

x time
y sales
starts convex in introduction then turns concave with point of inflection in growth stage then it peaks in maturity and goes down in decline

Question 9

what are some different objectives a company can have

Answer 9

corporate objectives, marketing objectives, pricing objectives

Question 10

what are the aims of pricing

Answer 10

profitability,
market share,
long term prosperity,
positioning

Question 11

what are the different pricing strategies *

Answer 11

premium pricing,
penetration pricing,
economy pricing,
price skimming

Question 12

what is premium pricing

Answer 12

price set to indicate distinctiveness of offering (higher quality)

Question 13

what is penetration pricing

Answer 13

price set low relative to competition to gain market share

Question 14

what is economy pricing

Answer 14

price set at bare minimum to attract price-sensitive customers

Question 15

what is price skimming

Answer 15

price set high initially then lowered in steps

Question 16

example of price skimming

Answer 16

video games

price set high initially then lowered in steps

Question 17

what is price skimming the opposite of

Answer 17

price penetration (price set low relative to competition to gain market share),
skimming (price set high initially then lowered in steps )

Question 18

what is price penetration the opposite of

Answer 18

price skimming (price set high initially then lowered in steps),
price penetration (price set low relative to competition to gain market share)

Question 19

what are the pricing approaches *

Answer 19

cost-oriented approach,
demand-oriented approach,
competitor-oriented approach,
value-oriented approach

Question 20

the pricing approaches (cost-oriented approach, demand-oriented approach, competitor-oriented approach, value-oriented approach) are not ________

Answer 20

distinctive

Question 21

explain cost-oriented approach

Answer 21

cost of production + % markup = price

Question 22

explain demand-oriented approach

Answer 22

prices set according to how much customers will pay

Question 23

explain competitor-oriented approach

Answer 23

prices set based on competitors’ prices

Question 24

explain value-oriented approach

Answer 24

prices set on basis of buyers’ perceptions of specific product-service attribute values rather than on costs or competitors’ prices

Question 25

what is loss-leader pricing

Answer 25

pricing strategy where a good is sold at below its market price in order to stimulate profit through sale of other goods

Question 26

example of loss-leader pricing

Answer 26

draws you into shop and shop accepts loss on product such as milk

Question 27

what is promotional pricing

Answer 27

encourage you to try something new

Question 28

example of segmentation pricing

Answer 28

classes on trains and planes

Question 29

what is negotiated pricing dependent on

Answer 29

bargaining power

Question 30

what is relationship pricing used to do

Answer 30

develop a longer relationship

Question 31

what are B2B buyers and sellers seeking to do

Answer 31

B2B buyers and sellers are seeking to resolve mutual needs to maximise profits

Question 32

what are B2B marketing relationships compared to B2C

Answer 32

B2B marketing relationships between suppliers and organisational buyers are close, long term and formal compared to B2C

Question 33

what are ethical issues in pricing

Answer 33

``` price fixing, predatory pricing, deceptive pricing, product dumping, price gouging ```

Question 34

what is deceptive pricing

Answer 34

retailers use deceptive means to trick the customers into thinking they are paying a lower price than what they actually are

Question 35

what is price gouging

Answer 35

price far higher than cost

Question 36

good example of price gouging

Answer 36

pharmaceutical industry

Question 37

what is pricing the only one of the 4ps to do

Answer 37

only one of the 4ps that creates revenue