Flashcards in Marketing Ch.14 Deck (46):
etting the highest initial price that customers really wanting the product are willing to pay. As the demand for the customers who really want decrease, firm decreases the price to satisfy other customers
When does Skimming work
-Enough customers are willing to buy immediately
-The high initial price will not attract competitors
- Lowering price only has a minor effect on increasing the sales volume and reducing the unit cost
-Customers interpret the high price as high quality
setting low initial price to appeal immediately to mass market.
When is penetration pricing efficient
- Many segments of the market are price sensitive
-Low initial price discourage competitors
- Unit production and marketing costs fall dramatically as production volumes increase
setting a high price so that quality or status conscious consumers will be attracted to the product and buy it.
firms that offer a line of product may price them at a number of different specific pricing points
involves setting prices a few dollars or cents under an even number.
manufacturer deliberately adjusting the consumption and features of a product to achieve the target price
the marketing of two or more products in a single package price
Yield Management Pricing
the changing of different prices to maximize revenue for a set amount of capacity at any given time
Standard Markup Pricing
adding a fixed percentage to the cost of all items in a specific product class. Used when they have a lot of products.
Cost Plus Pricing
summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.
Cost-plus percentage of cost pricing
fixed percentage is added to total unit cost . Used for one of a kind items
Cost- plus fixed fee pricing
supplier is reimbursed for all costs but also gets a fixed fee for profit independent of cost.
Experience Curve Pricing
based on the learning effect- holds that unit cost of many products and services declines by 10-30 percent each time a firm's experience at producing and selling them doubles.
Target Profit Pricing
set an annual target of a specific dollar volume of profit
Target Return-on- Sales Pricing
set typical prices that will give them a profit that is a specified percentage
Target Return-on-Investment Pricing
method of setting prices to achieve an annual return on investment percentage
or products where tradition/standardized channel of distribution/ competitive factors dictate the price.
Above-,At-,or Below-Market Pricing
For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors’ price or market price
not to increase sales but to attract customers in hopes they will buy other products as well
aka fixed pricing- setting one price for all buyers of a product or service
Flexible Price Policy
aka dynamic pricing- involves setting different prices for products/services depending on individual buyers and purchase situations.
Product Line Pricing
the setting of prices for all items in a product line. Manager seeks to cover the total cost and produce a profit for the complete line, not necessarily each item
Markets weigh factors heavily that satisfy the perceptions or expectations of ultimate consumers.
§ Reductions in unit costs for a larger order
Noncumulative quantity discounts
based on the size of an individual purchase order
Cumulative quantity discounts
- apply to the accumulation of purchase of a product over a given time period
to reward wholesalers/retailers for marketing functions they will perform in future
to encourage retailers to pay bills quickly.
reductions from list or quoted prices to buyers for preforming some activity.
Trade in Allowances
price reduction given when a used product is part of payment
money off for undertaking certain advertising or selling activities to promote e a product
Everyday low Pricing
practice of replacing promotional allowances with lower manufacturers list prices.
Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect the cost of transportation of the products from seller to buyer
FOB Origin Pricing-
involves the sellers naming the location of this loading as the sellers factory or warehouse. Buyer becomes responsible for transportation, trans cost and handling of product at point of loading.
Uniform Delivered pricing-
the price the seller includes all transportation costs. Seller selects mod of trans, pays fees and is responsible for all damage that occurs.
Single zone pricing
all buyers pay same delivered price for the products regardless of distance from the seller.
Multiple zone pricing
divides its selling territory into zones. The delivered price to all buyers within a zone is the same but differs between
Freight allowed pricing
price is quoted by the seller, buyer is allowed to deduct freight expenses from the list price of all the goods so the seller agrees to pay the transportation costs.
involves selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer.
illegeal under sherman act. The conspiracy among firms to set prices for a product .
illegal in most cases- practice of charging diff prices to different buyers for goods of like grade and quality.
When is price discrimination legal
-when change due to differences in cost of manufacture/sale/ or deliver resulting from differing methods or quantities.
-When price differences result from changing market conditions
-when price differences are quoted to selected buyers in good faith to meet competitors
price deals that mislead customers. Outlawed.