Marketing Ch 9: Pricing, Understanding and Capturing Customer Value

question

Price

answer

Amount of money charged for good or service

question

Customer value-based pricing

answer

Using buyer's perceptions of value to set cost

question

Good-value pricing

answer

Offering the right combination of quality and service at a fair price

question

Value-added pricing

answer

Attaching value-adding features to differentiated a market offering and justify higher prices

question

Cost-based pricing

answer

Setting prices based on costs, determines bottom line

question

Fixed costs

answer

Costs that don't vary with production/sales

question

Variable costs

answer

Costs that do vary with sales/production

question

Total costs

answer

Fixed costs + variable costs

question

Cost-plus pricing

answer

Pricing strategy that adds a markup to a product's cost

question

Competition-based pricing

answer

Setting prices based on competitor strategy, prices, costs, etc

question

Target costing

answer

Pricing strategy starting with an ideal selling price, and targeting costs to meet that

question

Demand curve

answer

Graph of number of units bought at different prices

question

Price elasticity

answer

How responsive demand is to change in price, inelastic means doesn't change much

question

Market-skimming pricing

answer

Pricing strategy that sets a high price for new products and skims off revenues from segments

question

Market-penetration pricing

answer

Setting a lower price for new products to attract lots of buyers

question

Product line pricing

answer

Setting prices based on steps between products in a line

question

Optional-product pricing

answer

Pricing based on accessory products to a mian product

question

Captive-product pricing

answer

Pricing products that must be used with a main product

question

By-product pricing

answer

Setting prices for byproducts produced, helps keep main product's price competitive

question

Product bundle pricing

answer

Combining several products and offering the bundle at a cheaper price

question

Discount

answer

Reduction to buyers for purchasing within a time frame or purchasing large quanitites

question

Allowance

answer

Reductions for prices in return for a promise to return merchandise

question

Segmented pricing

answer

Selling at different prices on a basis not related to costs (location, interest, etc)

question

Psychological pricing

answer

Pricing that considers the psychology of prices and what they convey about a product

question

Reference prices

answer

Prices consumers have when looking and referring to a product

question

Promotional pricing

answer

Temporarily pricing below list price to increase short run sales/excitement

question

Geographical pricing

answer

Setting prices for customers based on location, can be FOB, uniform, zone, basing point, or freight absorption

question

Dynamic pricing

answer

Constantly adjusting prices to meet individual consumers and needs

question

Customer-value based pricing steps

answer

1) Assess customer needs/value perceptions 2) Set target price to match customer value 3) Determine costs that can be incurred 4) Design product to deliver desired value at target price

question

Price cuts

answer

Can dominate market with lower costs, may be due to excess capacity, price competition, economy

question

Price increases

answer

Can be caused by profit needs, cost inflation, over demand

question

Buyer reaction to price change

answer

Depends on consumer, may see as bad or good

question

Competitor reaction to price change

answer

Most reaction based on similarity, uniform products, number of firms, and buyer education

question

Responses to competitor price changes

answer

Can reduce price (best for price sensitive), raise perceived value (costs money and lower margins), improve quality and raise price (moves to new price value), create fighter brand for price sensitive

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question

Price

answer

Amount of money charged for good or service

question

Customer value-based pricing

answer

Using buyer's perceptions of value to set cost

question

Good-value pricing

answer

Offering the right combination of quality and service at a fair price

question

Value-added pricing

answer

Attaching value-adding features to differentiated a market offering and justify higher prices

question

Cost-based pricing

answer

Setting prices based on costs, determines bottom line

question

Fixed costs

answer

Costs that don't vary with production/sales

question

Variable costs

answer

Costs that do vary with sales/production

question

Total costs

answer

Fixed costs + variable costs

question

Cost-plus pricing

answer

Pricing strategy that adds a markup to a product's cost

question

Competition-based pricing

answer

Setting prices based on competitor strategy, prices, costs, etc

question

Target costing

answer

Pricing strategy starting with an ideal selling price, and targeting costs to meet that

question

Demand curve

answer

Graph of number of units bought at different prices

question

Price elasticity

answer

How responsive demand is to change in price, inelastic means doesn't change much

question

Market-skimming pricing

answer

Pricing strategy that sets a high price for new products and skims off revenues from segments

question

Market-penetration pricing

answer

Setting a lower price for new products to attract lots of buyers

question

Product line pricing

answer

Setting prices based on steps between products in a line

question

Optional-product pricing

answer

Pricing based on accessory products to a mian product

question

Captive-product pricing

answer

Pricing products that must be used with a main product

question

By-product pricing

answer

Setting prices for byproducts produced, helps keep main product's price competitive

question

Product bundle pricing

answer

Combining several products and offering the bundle at a cheaper price

question

Discount

answer

Reduction to buyers for purchasing within a time frame or purchasing large quanitites

question

Allowance

answer

Reductions for prices in return for a promise to return merchandise

question

Segmented pricing

answer

Selling at different prices on a basis not related to costs (location, interest, etc)

question

Psychological pricing

answer

Pricing that considers the psychology of prices and what they convey about a product

question

Reference prices

answer

Prices consumers have when looking and referring to a product

question

Promotional pricing

answer

Temporarily pricing below list price to increase short run sales/excitement

question

Geographical pricing

answer

Setting prices for customers based on location, can be FOB, uniform, zone, basing point, or freight absorption

question

Dynamic pricing

answer

Constantly adjusting prices to meet individual consumers and needs

question

Customer-value based pricing steps

answer

1) Assess customer needs/value perceptions 2) Set target price to match customer value 3) Determine costs that can be incurred 4) Design product to deliver desired value at target price

question

Price cuts

answer

Can dominate market with lower costs, may be due to excess capacity, price competition, economy

question

Price increases

answer

Can be caused by profit needs, cost inflation, over demand

question

Buyer reaction to price change

answer

Depends on consumer, may see as bad or good

question

Competitor reaction to price change

answer

Most reaction based on similarity, uniform products, number of firms, and buyer education

question

Responses to competitor price changes

answer

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Marketing Ch 9: Pricing, Understanding and Capturing Customer Value

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