Term
| Name the (5) basic components of pricing strategies (the Five C's of Pricing) |
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Definition
1. Company Objectives
2. Customers
3. Costs
4. Competition
5. Channel Members |
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Term
| Name (4) common company objectives |
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Definition
1. Profit orientation: focuses on target profit pricing, maximizing profits, and target return pricing
2. Sales orientation: increasing sales will help the firm more than increasing profits
3. Competitor orientation: strategize according to the premise that they should measure themselves primarily against their competition
4. Customer orientation: invokes the concept of value |
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Term
| How do you measure price elasticity? |
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Definition
Price elasticity of demand =
% change in quantity demanded/% change in price
Elastic: when price elasticity is less than -1
Inelastic: when price elasticity is greater than -1 |
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Term
| Name the break even formula |
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Definition
| Break-even point (units) = fixed costs/contribution per unit |
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Term
| Name/describe the 3 types of competition |
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Definition
1. Oligopolistic competition: occurs when only a few firms dominate the market
2. Monopolistic competition: occurs when there are many firms that sell closely related but not homogenous products
3. Pure competition: occurs when different companies sell commodity products that consumers perceive as substitutable |
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Term
| Name (2) other influences on pricing |
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Definition
1. The internet
2. Economic factors |
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Term
| Name (3) pricing strategies |
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Definition
1. Cost-based method
2. Competitor-based method
3. Value-based methods
- improvement value method
- cost of ownership method |
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Term
| Name (2) pricing strategies when pricing new products |
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Definition
1. Price skimming: selling at a price that innovators and early adopters are willing to pay
2. Market penetration pricing: setting the initial price low for the introduction of the new product - objective being to build sales and profits quickly |
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Term
| Name (4) psychological factors affecting value-based pricing strategies |
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Definition
1. Consumers' use of reference prices
2. Everyday low pricing vs. High/low pricing
3. Odd prices
4. Price-quality relationship |
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Term
| Name (5) pricing tactics for business to business |
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Definition
1. Seasonal discounts
2. Cash discounts
3. Allowances (advertising allowance: price reduction for featuring a product in a channel member's advertising efforts) (listing allowances: fees paid to retailers simply to get new products into stores
4. Quantity discounts (cumulative vs. non-cumulative)
5. Uniform delivered vs. geographic pricing |
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Term
| Name (4) pricing tactics aimed at consumers |
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Definition
1. Price lining
2. Price bundling
3. Leader pricing: aggressively pricing and advertising a regularly purchased item
4. Consumer price reduction
- Markdowns
- Quantity discounts for consumers
- Seasonal discounts
- Coupons and rebates |
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Term
| Name (4) legal aspects and ethics of pricing |
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Definition
1. Deceptive and illegal price advertising
- Deceptive reference prices
- Loss leader pricing (lowering price below store's cost)
- Bait and switch
2. Predatory pricing: a firm sets very low prices with the intent to drive its competition out of business
3. Price discrimination: selling the same product to different resellers for different prices
4. Price fixing ( horizontal vs. vertical price fixing) |
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