Exam #4 Part 4 Flashcards
(31 cards)
Elastic Demand
Draw it!
Inelastic Demand
Draw it!
The Pricing Process (6)
- Analyze market conditions
- Identify constraints
- Establish objectives
- Analyze profit potential
- Determine initial price levels
- Adjust and manage prices
Major Pricing Objectives (9)
- Maximum current profit
- Maximum current sales growth
- Maximum current revenue
- Product-quality leadership
- Survival
- Positioning in consumer minds
- Partial cost recovery
- Full-cost recovery
- Social price
Qualitative Measures of Price Sensitivity (9)
- Customer expectations
- Unique value
- Substitute awareness
- Difficult comparison
- Total expenditure
- Contribution to overall benefit
- Shared cost
- Sunk investments
- Price-quality associations
Customer expectations
Expect to pay
Unique value
Can’t be found elsewhere
Substitute awareness
Viable?
Difficult comparison
Experience/credence
Total expenditure
Total cost - 10% discount
Contribution to overall benefit
Steelcase
Shared cost
Insurance
Sunk investments
Accountants, lawyers
Price-quality associations
Get what you pay for
Demand Based Pricing Techniques (9)
- Value pricing
- Skim pricing
- Penetration pricing
- Prestige pricing
- Odd-even pricing
- Price-lining
- Unit pricing
- Bundle Pricing
- Demand-backwards pricing
Value pricing
Adopting a lower price while maintaining the product’s basic value
Skim pricing
Charge a high price for an innovative or unique new product
Penetration pricing
Sets a lower price with a specific intention of gaining market share
Prestige pricing
Price to help you position a product as high quality or exclusive
Odd-even pricing
Uses specific numbers for psychological effect
Price-lining
Establishing a number of price levels covering a product line
Unit pricing
Price shown by some standard of measure
Bundle Pricing
Offer a package price for a group of related goods/services
Demand-backwards pricing
Starts with an assessment of price customers are willing to pay
