Pricing

Question 1

Price

Kotler et al.2008

Answer 1

The value that is placed on something

The sum of values that customers exchange for the benefits of having or using the product or service

Question 2

Name 5 things about pricing

Answer 2

Key factor in producing revenue for the firm

Easiest of all marketing variables to change

Important consideration in competitve intelligence

Considered to be the only means of differentiation in highly commoditised markets

Among the most complex decisions in the marketing plan

Question 3

What is the role of pricing? - sellers consider four key issues

Answer 3

Cost
Demand
Customer value
Competitors prices

Question 4

Buyer’s perspective on pricing

Answer 4

Perceived value

Price sensitivty

Question 5

When does the buyer’s market occur?

Answer 5

Large number of sellers in the market
Many substitutes for the product
Economy is weak

Question 6

A sellers market occurs when:

Answer 6

Products are in short supply

Products are in high demand

Economy is strong

Question 7

What are the key issues in pricing strategy

Answer 7

Pure competition
Monopolistic competition
Oligopoly
Monopoly

Question 8

Price elasticity

Answer 8

Refers to customer’s sensitivity to changes in price

Question 9

Inelastic demand

Answer 9

Customers are not sensitive to price changes

Question 10

Elastic demand

Answer 10

Customers are sensitive to price changes

Question 11

Unitary demand

Answer 11

Change in price and demand offset, so total revenue remains the same.

Question 12

Situations that increase price sensitivty

Answer 12

Availability of product substitutes

Easy price comparions

Higher total expenditure

Noticeable Differenceces

Question 13

Situtations that decrease price senstivity

Answer 13

Product Differentiation

Lack of substitutes

Real or perceived necessities

Perceived product benefits

Situational influcnes

Question 14

Pure Competition

Answer 14

Agricultural product such as wheat

Question 15

Monopolistic competition

Answer 15

Restaurants

Question 16

Oligopoly

Answer 16

Petrol stations

Question 17

Monopoly

Answer 17

Railway

Question 18

Pricing: Legal and ethical issues

Answer 18

Predatory pricing
Price fixing
Price Discrimination
Deceptive Pricing

Question 19

Factors influcneing customer perception of price

Answer 19

Financial 
Quality 
Functional 
personal 
Nature of purchase

Question 20

Internal influences on price

Answer 20

Costs
Organisational objectives
Marketing objectives

Question 21

Name 3 pricing objectives

Answer 21

Must be consistent with marketing

objectives are unique to the firm - reflect their environment

Question 22

ROI

Answer 22

Return on investment

Question 23

Name 5 pricing objectives

Answer 23

ROI 
Target return on sales
Profit Maximisation
Cash flow 
break-even profits

Question 24

Name 3 sales oriented pricing objectives

Answer 24

Sales target
Sales Growth
Market share

Question 25

Name 3 competitor oriented pricing objectives

Answer 25

Meet Avoid Undercut

Question 26

External influences on price

Answer 26

``` Competition Demand & Elasticity Channels of distribution customer and consumers Legal and regulatory ```

Question 27

How are companies currently matching competition?

Answer 27

Vouchers to match shopping values Matching on-line prices Interest makes price matching easier Agreeing requests by consumers within negotiations Unit pricing makes it easier to compare different sizes of packaging

Question 28

Channels of distribution

Answer 28

Channels of distribution need to earn a profit by acting as intermediaries. Suppliers to channels of distribution need to consider what is an appropriate margin for what they do Conflict can arise because intermediaries are earning different amounts from the same supplier

Question 29

Value-based pricing

Answer 29

A reversal of the cost-based pricing approach Focus is on the buyer's perception of value, not the sellers cost

Question 30

Competition based pricing

Answer 30

Price is set based on competitor's strategies, costs, prices and market offerings

Question 31

Price adjustments - Discount and allowance

Answer 31

Rewards based on time of payment, cash and volume.