Price Mix, Decision, and Strategies Flashcards
(44 cards)
is the amount of money charged for a product or
service.
pricing
it is the sum of the values consumers exchange for the
benefits of having or using the product or service.
pricing
formula for the value
Value = perceived benefits – acquisition cost
Government Transactions are also called
“Bids” or “Quotations”
Manufacturer to Trade Outlets are also called
“Catalogue” or “List Price”
Wholesalers/Retailers to Consumers are also called
Retail Price
Bulk Sales are also called
Wholesale Price
Post-Tax Cost is also called
Net Price
Production Costs are also called
Billing Price
Trade Outlet Incentives are also called
Rentals/Allowance
Applies to transactions with hospitals, industrial firms,
and health agencies.
Reflects a competitive bidding process.
Bids include pricing, delivery terms, and quality
assurances.
Selection is based on cost, quality, and regulatory
compliance.
“Bids” or “Quotations”
Applies to transactions with wholesalers, distributors,
and pharmacies.
Represents the manufacturer’s standard price.
Prices may be adjusted based on volume or
agreements.
Facilitates consistent pricing across distribution.
“Catalogue” or “List Price”
Final price for consumers/patients.
Includes markup for retailer’s costs.
Influenced by local market, competition, demand.
Retail Price
Price for large-volume sales to retailers, institutions.
Lower unit costs due to economies of scale.
Subject to negotiations and discounts.
Wholesale Price
Final cost including all applicable taxes (e.g., VAT).
Actual amount paid by purchasers.
Crucial for budgeting and financial planning.
Net Price
Total cost of production (raw materials, labor,
overhead).
Basis for wholesale and retail pricing.
Ensures cost recovery and profit.
Billing Price
Payments from manufacturers to retailers for prime
product displays.
Incentivizes favorable shelf space or floor displays.
Marketing cost to the manufacturer.
Can be monthly fees, discounts, or promotional
arrangements.
Rentals/Allowance
customers use price as an indicator of quality,
particularly for products where objective measurement
of quality is not possible
Price-quality relationship
a pricing strategy where a company offers a range of
products or services at different price points, with each
product having a distinct set of features and benefits
when a competitor launches a low price brand that
threatens to eat into its market share, it launches a low
price fighter brand to compete with low price
competitor brands
Product line pricing
a company should be able to justify the price it is
charging, especially if it is on the higher side
consumer product companies have to send cues to the
customers about the high quality and the superiority of
the product
Explicability
a company reduces its price to gain market share
a company should be able to anticipate reactions of
competitors to its pricing policies and moves
Competition
allow price to fall from list price levels but still permit
profitable transactions
Negotiating margins
when products are sold through intermediaries like
retailers , the list price to customers must reflect the
margin s required by them
Effect on distributors and retailers
Internal Factors Affecting Prices
Top level management
Elements of marketing mix
Degree of product differentiation
Costs
Objectives
Stage of product life cycle
Product quality
Brand Image
Category of Class of Product
Market share
