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D174 Module 9
Pricing Strategy
| Question | Answer |
|---|---|
| Cost Leadership | strategy where a company keeps its costs lower than everyone else |
| Elements of Pricing Decisions | Establishing Pricing objectives and related strategies, Select pricing tactics, Set exact price, Determine channel allowances/discounts, Execute price changes, Understand legal considerations in pricing |
| Pricing Objectives | The desired or expected results associated with a pricing strategy that is consistent with other marketing-related |
| Penetration Pricing | Keeping price low for Market share maximization |
| Price skimming | Market entry at the highest possible initial price |
| Target ROI | company sets a product’s price based on the return on investment they want to earn, not just on what it costs to make or what competitors are charging. |
| Competitor-based pricing | when a company basically looks around, sees what everyone else is charging, and says, let’s price ours somewhere in that range. |
| Value pricing | company sets the price based on what the customer thinks the product is worth, not what it costs to make or what competitors charge. |
| Market share | the % of total category sales accounted for by a firm |
| Price war | When a company purposefully makes pricing decisions to undercut one or more competitors and gain sales and net market share. |
| Stability pricing | pricing approach where a company tries to land in the sweet spot: not so cheap that competitors freak out and start a price war, but not so expensive that customers start thinking that it is not worth it. |
| Value pricing | pricing strategy in which a firm attempts to take into account the role of price as it reflects the bundle of benefits sought by the customer. |
| product line pricing (price lining) | company sets prices for a whole group of products in a coordinated way, instead of treating each one like a random guess. |
| captive pricing (complementary pricing) | company hooks the customer with a core product, but that product only works if they keep buying add-ons, refills, upgrades, or accessories from the company |
| Price bundling | company bundles multiple products or services together and sells them as a package for less than they'd cost on their own. |
| Reference pricing | It's a pricing approach where the company doesn’t just show you the price of one thing by itself—they put it next to other options so you can compare. |
| Prestige Pricing | company intentionally prices something higher than everyone else to signal that it's premium, exclusive, or just plain better. |
| odd pricing | A pricing tactic in which the price is not expressed in whole dollar increments. |
| even pricing | A pricing tactic in which the price is expressed in whole-dollar increments. |
| Psychological pricing | Creating a perception about price merely from the image the numbers provide the customer. |
| One price strategy | A pricing tactic in which the price marked on a good is what it typically sells for. |
| Variable pricing | A pricing tactic in which customers are allowed or encouraged to haggle about prices. |
| EDLP -Every Day Low price | A pricing tactic that entails relatively low, constant prices and minimal spending on promotional efforts. |
| High/Low pricing | A pricing strategy in which the retailer offers frequent discounts, primarily through sales promotions, to stated regular prices. |
| Auction pricing | A pricing tactic in which individuals competitively bid against each other and the purchase goes to the highest bidder. |
| Reverse auctions | When sellers bid prices to buyers and the purchase typically goes to the lowest bidder |
| Cost plus pricing/Mark up pricing | Building a price by adding standardized markup on top of the costs associated with the offering. |
| Mark up on sales pricing | Using the sales price as a basis for calculating the markup percentage. |
| Average cost pricing | A pricing decision made by identifying all costs associated with an offering to come up with what the average cost of a single unit might be. |
| Target return pricing | A pricing decision made by considering fixed and variable costs and then demand forecasting to determine the price per unit. |
| Trade discount | An incentive to a channel member for performing some function in the channel that benefits the seller. |
| Discounts | Direct immediate reduction in price provided to purchasers |
| Cash Discounts | A percentage discount off invoice to elicit quicker payment by the customer. |
| Quantity discounts | Discounts taken off an invoice price based on different levels of product purchased. |
| Seasonal discounts | Discounts that reward the purchaser for shifting part of the inventory storage function away from the manufacturer. |
| Promotional allowances | Sales promotions initiated by the manufacturer and carried out by the retailer, who is then compensated by the manufacturer. |
| FOB (free on board) | Determination of title transfer and freight payment based on shipping location. |
| Uniform delivered pricing | When the same delivery fee is charged to customers regardless of geographic location within a set area |
| Zone pricing | When shippers set up geographic pricing zones based on the distance from the shipping location. |
| just noticeable difference (JND) | The amount of price increase that can be taken without impacting customer demand. |
| Price fixing | When companies collude to set prices at a mutually beneficial high level. |
| Price discrimination | When a seller offers different prices to different customers without a substantive basis, such that competition is reduced. |
| Deceptive pricing | Knowingly stating prices in a manner that gives a false impression to customers. |
| Bait and Switch | When a seller advertises a low price but has no intent to actually make the lower-priced item available for sale. |
| Fair Trade laws | Laws designed to allow manufacturers to establish artificially high prices by limiting the ability of wholesalers and retailers to offer reduced or discounted prices. |
| Minimum mark up laws | Laws that require retailers to apply a certain percentage of markup to their products for sale. |
| Loss leader products | Products sacrificed at prices below costs in an effort to attract shoppers to the retail location. |
Created by:
mkale
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