24 Questions
What does price mean to the consumer?
The cost of something they want
What is included in the concept of price?
The time lost while waiting for the good or service
What do potential buyers carefully evaluate when considering the price of a product?
Price of a product against the value of existing products
Poll: Pricing products is one of the easiest tasks marketing managers undertake.
False
Leo's price matching tactic at Walmart is an example of which pricing tactic?
Flexible pricing
Liza's experience at the store with the sale on laptops is an example of
Bait pricing
Price bundling involves
Offering two or more products in a single package for a special price
Which pricing tactic involves promoting a saving that is not available or a low price on a limited number?
Deceptive pricing
What is the term for charging different prices for different buyers to reduce competition?
Price discrimination
What is the term for setting a price very low with the intent of driving competition out?
Predatory pricing
What is the term for luring customers in through false or misleading advertising?
Bait pricing
What is the term for two or more companies conspiring to set a price, establishing a floor in a bidding situation, or setting the market price that consumers will pay?
Price fixing
What are the three main pricing objectives mentioned in the text?
Sales-oriented, status quo, and profit-oriented
What is the focus of sales-oriented pricing objectives?
Market share or sales maximization
What does break-even analysis help determine?
The price point at which the firm can begin to make a profit on each unit sold
What does price skimming involve?
Setting a high initial price and then lowering it over time
What are the key factors involved in estimating demand, costs, and profits?
Cost estimation, demand estimation, price sensitivity, and break-even analysis
What is the focus of status quo pricing objectives?
Maintaining existing prices and meeting competition prices with minimal planning
What does dynamic pricing involve?
Adjusting prices in real time based on demand and supply
What is the purpose of price tactics such as value-based pricing?
To set prices based on the perceived value to the customer
What is the example of a company with a sales-oriented pricing objective mentioned in the text?
Tentree, a Canadian apparel company
What does price lining involve?
Offering a range of products at different price points
What does single price strategy entail?
Offering all products at the same price
What does loss leader strategy involve?
Offering a product at a low price to attract customers, with the intention of making up for the loss on other products
Study Notes
Pricing Process Overview
- Pricing objectives can be sales-oriented, status quo, or profit-oriented, with specific goals such as profit maximization, satisfactory profits, or target return on investment.
- Sales-oriented objectives may focus on market share or sales maximization, while status quo objectives involve maintaining existing prices and meeting competition prices with minimal planning.
- Price changes through the product life cycle (PLC) involve high prices in the introduction stage, stable prices in maturity, and potential further price reductions or increases in decline.
- The example of Tentree, a Canadian apparel company, illustrates a sales-oriented pricing objective focused on achieving profits while maintaining a value proposition.
- Estimating demand, costs, and profits involves cost estimation, demand estimation, price sensitivity, elasticity of demand, and break-even analysis.
- Break-even analysis helps determine the price point at which the firm can begin to make a profit on each unit sold.
- Choosing a price strategy involves considering product positioning, costs, demand, and the PLC stage, with options such as price skimming, penetration pricing, or status quo pricing.
- Price tactics include setting a base price and fine-tuning it using tactics such as discounts and allowances, value-based pricing, dynamic pricing, and geographic pricing.
- Other pricing tactics include single price, flexible price, price lining, and loss leader strategies, each with specific applications and consumer behavior considerations.
Test your knowledge of the pricing process with this overview quiz. Explore pricing objectives, product life cycle pricing, pricing strategies, and tactics used by companies. See how well you understand concepts like demand estimation, break-even analysis, and different pricing approaches.
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