week 14 & 15 Flashcards
(26 cards)
COST-BASED PRICING (5)
PRODUCT
COST
PRICE
VALUE
CUSTOMER
Prices are set based largely on competitors’ prices rather than on company costs or demand.
Example: Coca-Cola & Pepsi war
COMPETITOR-BASED PRICING
VALUE-BASED PRICING (5)
CUSTOMER
VALUE
PRICE
COST
PRODUCT
usually change as a product passes through its life cycle. The introductory stage of the product life cycle is particularly challenging.
- PRICING STRATEGIES
2 types of * PRICING STRATEGIES
MARKET-SKIMMING PRICING
MARKET-PENETRATION PRICING
Involves setting a high price for a new product to skim maximum revenue from the segments willing to pay the high price.
; Fewer sales but more profitable sales. —Iphone15’S
price in the PH starts at 56,990.
*MARKET-SKIMMING PRICING
A true standout in the penetration pricing approach is Netflix. The company has avoided significant price hikes while at the same time building steady growth of its customer base.
MARKET-PENETRATION PRICING
; Setting a low price for a new product in order to attract a large number of buyers and large market share.
MARKET-PENETRATION PRICING
Pricing is difficult because the variations of products have related demand and costs, and face different degrees of competition.
PRODUCT-MIX PRICING STRATEGIES
PRODUCT-MIX PRICING STRATEGIES (5)
Product line pricing
Optional product pricing
Captive product pricing
By-product pricing
Product-bundle Pricing
Involves setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices.
Product line pricing
Involves the pricing of optional or accessory products along with a main product. (i.e. camera bag)
Optional product pricing
Involves setting a price for products that must be used along with a main product. (i.e. film)
Captive product pricing
Involves setting a price for by-products in order to make the main product’s price more competitive. (i.e. sawdust)
By-product pricing
Involves combining several products and offering the bundle at a reduced price.
Product-bundle Pricing
Companies usually adjust their basic prices to account for various customer differences and changing situations.
PRICE-ADJUSTMENT STRATEGIES:
Is a straight reduction on price on purchases during stated period of time.
discount
Is a price reduction given for turning in an old item when buying a new one.
allowance
Companies of Ten adjust their prices to allow for differences in customers, products, and locations.
segmenting price
It is a pricing approach that considers the psychology of prices and not simply the economics: the price is used to say something about the product.
PSYCHOLOGICAL PRICING
It is temporarily pricing products below the list price, and sometimes even below cost, to increase short-term sales.
PROMOTIONAL PRICING
Must be decided on how to price products to consumers located in different parts of the country.
- International pricing
GEOGRAPHICAL PRICING
Reduce the product’s price to match the competitors price
RESPONDING TO PRICE CHANGE
Maintain the company’s price but raise the perceived quality of its offer.
RESPONDING TO PRICE CHANGE
