Term
|
Definition
| A pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. |
|
|
Term
| Conditions favoring skim pricing |
|
Definition
1. Product or service is unique
2. Economically viable insensitive segments exist
3. Potential to achieve economies of scale/scope do not exist
4. Organization is protected from competitors |
|
|
Term
|
Definition
| Setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers and then increasing the price to the long term price. |
|
|
Term
| Conditions favoring penetration pricing |
|
Definition
1. A large price sensitive market exists
2. Substantial scale/scope economies exist
3. Potentially strong competition exists
4. Inadequate demand in price insensitive markets to support skim pricing |
|
|
Term
|
Definition
| The practice of pricing goods at a high level in order to give the appearance of quality |
|
|
Term
|
Definition
| Sale of a related range of products at different prices, each representing a distinct level of quality. |
|
|
Term
| Two options of price lining |
|
Definition
1. Offering the same product at different price points (offering a range of pricing)
2. Carrying a line of products within one price range |
|
|
Term
|
Definition
| A pricing strategy where identical goods or services are transacted at different prices for various reasons |
|
|
Term
| Different types of discriminatory pricing |
|
Definition
1. Customer segment pricing
2. Product form pricing
3. Location pricing
4. Time pricing
5. Image pricing
Note: these are not the only ways to segment pricing |
|
|
Term
|
Definition
Pricing discrimination based on:
-Incomes of buyers
-Buyers' socioeconomic characteristics such as age or sex
- State of buyers (i.e. new customers, big buyers) |
|
|
Term
|
Definition
Pricing discrimination based on:
- Qualities of products (higher prices for deluxe models)
- Sizes of products (buying in bulk) |
|
|
Term
|
Definition
Pricing discrimination based on:
- Location of buyers |
|
|
Term
|
Definition
Pricing discrimination based on:
- Peak and off-peak services |
|
|
Term
|
Definition
Pricing discrimination based on:
- Labels and products (unbranded products vs. high end brand) |
|
|
Term
| Pricing Complementary Products |
|
Definition
| When a product is given for essentially free to achieve maximum sales volume, (without cost or profit considerations) to stimulate the demand for the other product. Such as giving a razor away with a pack of razor blades. |
|
|
Term
|
Definition
1. Related use
2. Reduced shopping time
3. Greater satisfaction
4. Improved image |
|
|
Term
| Related use complementaries |
|
Definition
-Free printer, high priced ink cartridges
-Free glucometer, high priced test strips |
|
|
Term
| Reduced shopping time complementaries |
|
Definition
| - Grocery store offering best prices |
|
|
Term
| Greater satisfaction/Improved image complementaries |
|
Definition
| - Throwing in extras with a big purchase (car gps, camera lenses, custom car accessories) |
|
|
Term
| Discounts, Allowances and other adjustments |
|
Definition
| Before reaching the final price, some adjustments are required |
|
|
Term
|
Definition
1. Identifying factors that affect price setting
2. Identifying price objectives
3. Estimating demand, determining cost, volume and profit relationships
4. Selecting an approximate price level
5. Setting the list price
6. Making price adjustments - discounts, allowances and other policy considerations
7. Monitoring and adjusting prices |
|
|
Term
|
Definition
- Pricing new and mature products
- Pricing methods
- Discounts, allowances and other adjustments off of list price
- Price lining
- Price complementary products
- Response to competitors' price changes |
|
|
Term
| External factors affecting pricing |
|
Definition
1. Channel members' expectations
2. Buyers' perceptions
3. Competition
4. Microenvironmental forces |
|
|
Term
| Internal factors affecting pricing |
|
Definition
1. Organizational and marketing objectives
2. Pricing objectives
3. Costs
4. Other marketing mix variables |
|
|
Term
|
Definition
1. Pricing oriented (maximize profits, target return)
2. Sales oriented ($ or unit sales growth, growth in market share)
3. Status-Quo oriented (Meeting competition, non-price competition) |
|
|
Term
|
Definition
1. Demands-oriented methods
2. Cost-oriented methods
3. Profit-oriented methods
4. Competition-oriented methods |
|
|
