week 9

Question 1

prcining defention

Answer 1

economic part is main element, pricing is everything giving up to get even the time for search: taxes and shipping

Question 2

when is price a indicator of quality

Answer 2

in absence of other info
o Effects perceived quality  wine tasting ex
 Cannot make it too cheap bc may think lack of quality

Question 3

5 cs of pricing are

Answer 3

customer, company objective, costs, compeition, channel memebers

Question 4

what is price elasticity of demand

Answer 4

% change in quantitiy demanded/ % change in price  how consumers respond to price increase

how demand respond to change in price

Question 5

in elastic vs elastic # and examples

Answer 5

• Elasticity inelastic = -1 , elastic = 1+
• Gas = inelastic
• Fast fashion = elastic, bc not basic need
• Alcholol = depend on context if you alcoholic then inelastic

Question 6

compeition is regard to what in pricing? and how to compare

Answer 6

 How do we compare in terms of value, how strong are competitiors and what are their pricing strat

benchmark and review pricng stratgies

Question 7

what is cost base pricing

Answer 7

base on our costs, no demnad analysis or willing to pay but set the floor for the price and add markup to make price , cost + markup

Question 8

what does markup in cost base depend on

Answer 8

o Markup depends on factor like industry, what kind of product
o Set floor price the company can charge important element in pricing strategy

Question 9

what is value based pricign and exmapels

Answer 9

• Value based = value of our service
  o Every day low pricing strategy like Walmart
  o Good value = what our we offering , Walmart = one stop all have best value
  o High low = promotions and sales

Question 10

for new product use what pricing stratgies

Answer 10

skimming or penetrate

Question 11

what is market skimming

Answer 11

Market skimming = those products where price high at beginning for new innovative products early adopter willing to pay and reduce as competiion increases

Question 12

what is market penetration

Answer 12

o Market penetration
 Setting low price to attract new customer at beginning main objective is to grow market share
 Like Spotify and ikea

Question 13

what are examples of price tactic

Answer 13

price line, price bundle, optional product pricing, captive product pricing, consumer price reduction like rebate or markdowns, shrinkfltion, segmented, dynamic

Question 14

what is price lining

Answer 14

Price lining = one product low price and one high with diff prices between
 365 whole foods smaller cheaper stores
 Tesla model: x model expensice and e cheaper with model between

Question 15

what is price bundle

Answer 15

o Price bundling = group diff product in a bundle and offer to market at one price
 Ex telus home internet and cable

Question 16

what is optional product pricing

Answer 16

o Optional product pricing
 One product and add ones

Question 17

what is captive product pricg

Answer 17

o Captive product pricing = core product and accessory
 Ex wii is core product and then games
 Or nesspresso machine and pods accessory

Question 18

markdowns vs rebates

Answer 18

 Markdowns for end of season sales
* Quantitiy and size disocunts
 Rebates
* We are going to pay full price and recive a portion back
o Like EV

Question 19

when shrinkflation used

Answer 19

 Elastic product don’t want lose product so put less product and same price

Question 20

segmented prcing examples

Answer 20

 Customer segment: like student or senior discount
 Product form:
 Location based: location we select depend price
 Time based: depend on season like resort

Question 21

what is pink tax

Answer 21

women are charged more for products as they are pink

Question 22

what is dynamic pricing and advantages

Answer 22

o Dynamic pricing: demand plays into pricing like uber or airplane ticket
 Some advantages for it maximize profit and giving inside to consumer behavior

Question 23

what is pyschological pricing

Answer 23

o Price as indicator of quality
o Refrences prices
o Symbolic and visual qual assoc with numbers
 Like power of nine  assoc with first number so use .99

Question 24

most difficult to manage of 4ps

Answer 24

pricing

Question 25

company objectives in pricing

Answer 25

profit oreint, sales orient, competitor oreint, customer oreint

Question 26

what is profit oreint

Answer 26

focusing on target pricing, maximizing profits or target return pricing.

Question 27

what is sales oreint

Answer 27

set price believing that increasing sales will help the firm more than increasing profits. like low memebershhip fees

Question 28

what is competitor oreintation

Answer 28

strategizing according to the premise that they should measure themselves primarily against their competition.

Question 29

what is customer oreint

Answer 29

explicitly invokes the concept of value. Sometimes a firm may attempt to increase value by focusing on customer satisfaction and setting prices to match consumer expectations.

Question 30

what is prestige product

Answer 30

which consumers purchase for their status rather than their functionality.

Question 31

what is prestige demand curve

Answer 31

demand decrease as price decreases until point where demand increases as price increases like backward c

Question 32

elastic vs inelastic product

Answer 32

elastic: 1% decrease in price produce more than 1% increase in q sold

Question 33

factor effect elasticity of demand

Answer 33

income effect: change q demand bc income, move low price prodcut to higher sub effect: sub product for other --> higher elasticity cross price elasticity: % change q A compared to B complentary product: demand rise or fall tog sub product: demand negativley related

Question 34

Issue with BE price

Answer 34

: unlikely same price for everything, prices often get reduced as quant increases bc cost decreases so use at diff quants, cant tell how many items bought at price

Question 35

4 levels of market comp

Answer 35

monopoly: one firm control market, oligopoly: few firm control monopolisic comp: many firms selling differentiated product at diff price pure comp: many firm sell commodity for same price dimensions less price comp, more ad many firms less firms

Question 36

what lead to ocnflict with channel memebrs

Answer 36

Different perspectives on pricing can lead to conflicts between manufacturers, wholesalers, and retailers. Communication and agreement on pricing strategies are essential.

Question 37

what is grey market

Answer 37

A grey market: when distribution comes outside normal channels. This includes illegal methods, generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.

Question 38

what is imporvement value method price setting

Answer 38

represents an estimate of how much more or less consumers are willing to pay for a product relative to other comparable products.

Question 40

cost ownership method in price setting

Answer 40

consumers may be willing to pay more for a particular product because, over its entire lifetime--> eventually cheaper

Question 41

EDLP is

Answer 41

a strategy that where companies stress the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer.

Question 42

High low pricing is

Answer 42

: a strategy which relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

Question 43

for price skimming to work must

Answer 43

● Other competitors cant enter the market easily ● the product or service must be perceived as breaking new ground in some way, offering consumers new benefits currently unavailable in alternative products.

Question 44

drawback of price skimming

Answer 44

high unit cost with small volume produced, earn RD back, must test price sensitivity

Question 45

market pentration benefit

Answer 45

purchase immdiatley, low PM so discourage comp to enter

Question 46

draw back of penetration start

Answer 46

1. is that the firm must have capacity to satisfy 2. Low price does not signal hight quality 3. Firms should avoid a penetration strategy if some segments of the market are willing to pay more for the product, (firm leaves money on the table)

Question 47

B2B pricing tactic

Answer 47

Seasonal Discounts: Incentives for ordering in advance of the buying season. Cash Discounts: Reduced prices for early payment. Allowances: Price reductions for specific behaviors, such as promoting a product.

Question 48

legal/ethical issues in pricing

Answer 48

Deceptive Pricing Practices: Including misleading reference prices, bait-and-switch tactics, and predatory pricing. Price Discrimination: Charging different prices to different resellers, which can be illegal under certain conditions. Price Fixing: Colluding with competitors to set prices, which is illegal. vertical = diff level same marketing channel, horizontal = comp that work together collude