Term
| New Product Pricing Strategies |
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Definition
| Pricing strategies usually change as the product passes through its life cycle. The introductory stage is especially challenging. Companies brining out a new product face the challenge of setting prices for the first time. The can choose between two broad strategies: market-skimming pricing and market-penetration pricing. |
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Term
| Market-skimming pricing (price skimming) |
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Definition
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price, the company makes fewer but more profitable sales.
Think Apple, first iphone. |
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Term
| Market-penetration pricing |
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Definition
Setting a low price for a new product to attract a large number of buyers and a large market share
ie. IKEA in China |
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Term
| 5 Product Mix Pricing strategies |
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Definition
1. Product line pricing
2. Optional product pricing
3. Captive product pricing
4. by product pricing
5. Product bundle pricing |
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Term
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Definition
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
think skies, different types different levels |
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Term
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Definition
The pricing of optional or accessory products along with a main product.
Ie. Cars: can have more features (GPS, leather intererior ect.) |
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Term
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Definition
Setting a price for products that must be used along with a main product, such as blades for a razor and games for a videogame console.
Producers of the main products, razors, videogame consoles often price them low and set high markups on the supplies.
"two part pricing" for servies
the price of the service is broken into a fixed fee plus a variable usage rate |
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Term
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Definition
Setting a price for by products to make the main product's price more competitive.
helps lower costs to dispose of by-prodcut |
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Term
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Definition
Combing several products and offering the bundle at a reduced rate
ie. fast food restaurants bundel a burger, fries and a soft drink at a "combo" price.
Price bundle can promote the sales of products consumers might not otherwise buy but the combine price must be low enough to get thee to buy the bundle. |
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