Pricing Strategies and Concepts
121 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is price primarily defined as?

  • The sum of the values exchanged for benefits of a product or service (correct)
  • The combined costs of production and distribution
  • The total cost incurred by the firm only
  • The monetary amount only paid for a product or service

Which of the following is NOT a factor that can be modified to change the price?

  • Method of payment
  • Target audience age group (correct)
  • Quantity discounts
  • Quality of goods supplied

Why is price considered a powerful competitive tool in marketing?

  • It can be easily adjusted in the short term to meet demand. (correct)
  • It always leads to higher customer loyalty.
  • It guarantees lower costs for companies.
  • It discourages competition within the market.

What is a common mistake companies make in pricing strategies?

<p>Quickly lowering price to boost sales (B)</p> Signup and view all the answers

Which of the following best describes value-based pricing?

<p>Pricing determined by the perceived value to the consumer (B)</p> Signup and view all the answers

How does price impact consumer behavior?

<p>It is a primary indicator of product quality and brand image. (A)</p> Signup and view all the answers

Which statement about pricing is accurate?

<p>Price generates income, while other marketing elements incur expenses. (D)</p> Signup and view all the answers

What can result from a price war among competitors?

<p>A potential zero-sum situation where no one gains (A)</p> Signup and view all the answers

What is the primary focus of good-value pricing?

<p>Providing a combination of quality and service at a fair price (A)</p> Signup and view all the answers

Which pricing strategy involves adding features or services to differentiate a product?

<p>Value-added pricing (D)</p> Signup and view all the answers

What does the term 'experience curve' refer to in cost-based pricing?

<p>The reduction of costs due to the learning gained from production experience (C)</p> Signup and view all the answers

In which type of market does a single seller dominate and set prices?

<p>Monopoly (D)</p> Signup and view all the answers

What pricing strategy is considered when a company aims to maximize its current profits?

<p>profit maximization pricing (B)</p> Signup and view all the answers

Which of the following is a goal in pricing that promotes increased market share?

<p>Lowering costs due to volume sales (A)</p> Signup and view all the answers

What does cost-plus pricing entail?

<p>Adding a standard markup on production costs (D)</p> Signup and view all the answers

What is a characteristic of oligopolistic markets in terms of pricing?

<p>Prices tend to be similar across the few competing sellers (B)</p> Signup and view all the answers

Which of the following factors does not influence pricing strategy?

<p>Competitor product warranties (C)</p> Signup and view all the answers

What is the purpose of conducting a break-even analysis?

<p>To determine the price needed to cover costs and achieve no profit (D)</p> Signup and view all the answers

What does price elasticity measure?

<p>The sensitivity of demand relative to price changes (D)</p> Signup and view all the answers

Which of the following objectives is associated with 'survival' pricing?

<p>Covering variable and some fixed costs in highly competitive environments (A)</p> Signup and view all the answers

In value-added pricing, the focus is on which of the following?

<p>Creating differentiation through added benefits for higher pricing (C)</p> Signup and view all the answers

When setting prices, what internal consideration typically affects larger companies more than smaller ones?

<p>Pricing department evaluations (A)</p> Signup and view all the answers

What type of conflict occurs between members of the same level in a channel?

<p>Horizontal conflict (A)</p> Signup and view all the answers

Which of the following best describes the process of desintermediation?

<p>Directly selling products to consumers (C)</p> Signup and view all the answers

What is a common cause of channel conflict?

<p>Unclear roles and rights (B)</p> Signup and view all the answers

What is the primary focus of marketing logistics?

<p>Planning the physical flow of goods (C)</p> Signup and view all the answers

Which aspect does NOT contribute to logistical efficiency?

<p>Production cycle extension (B)</p> Signup and view all the answers

What is a key dimension of credibility that experts must possess?

<p>Specialized knowledge (A)</p> Signup and view all the answers

What is reverse logistics primarily concerned with?

<p>Returning unsold or defective products (C)</p> Signup and view all the answers

Which communication channel allows for direct feedback between individuals?

<p>Face-to-face conversations (B)</p> Signup and view all the answers

Which communication mix tool is primarily focused on immediate engagement with customers?

<p>Personal selling (B)</p> Signup and view all the answers

What role does inventory management play in customer satisfaction?

<p>It balances stock levels to avoid shortages. (B)</p> Signup and view all the answers

Which budgeting method is characterized by matching competitors' expenditures?

<p>Competitive-parity (B)</p> Signup and view all the answers

What are push strategies primarily focused on achieving?

<p>Pushing products through distribution channels (C)</p> Signup and view all the answers

What is a significant challenge of multi-channel conflict?

<p>It may result in market cannibalization. (B)</p> Signup and view all the answers

Which of the following would NOT be a helpful mechanism for managing channel conflict?

<p>Inflexible role assignments (A)</p> Signup and view all the answers

Which of the following is a primary objective of advertising?

<p>To inform and create brand awareness (B)</p> Signup and view all the answers

How does technology influence supply chain management?

<p>By offering tools for improved efficiency (D)</p> Signup and view all the answers

What does the 'reach' in media selection refer to?

<p>The largest audience one can expose to a message (A)</p> Signup and view all the answers

What is a primary consideration when selecting a mode of transportation for logistics?

<p>Speed, reliability, and overall cost (D)</p> Signup and view all the answers

What is the primary focus of buzz marketing?

<p>To leverage personal influence to spread information (B)</p> Signup and view all the answers

Which advertising budget method takes into account market objectives?

<p>Objective-and-task (B)</p> Signup and view all the answers

Which objective is NOT associated with consumer marketing?

<p>Motivate retailers to incorporate new products (B)</p> Signup and view all the answers

Which communication tool is used to build relationships and encourage specific interactions with the brand?

<p>Sponsorships (C)</p> Signup and view all the answers

What is the main goal of supply chain management?

<p>To manage value-added flows efficiently (D)</p> Signup and view all the answers

What is a primary goal of public relations?

<p>Enhancing good relations with target audiences (D)</p> Signup and view all the answers

What does 'continuity' in media calendar decisions refer to?

<p>Regular exposures over time (B)</p> Signup and view all the answers

What aspect is NOT considered during advertising effectiveness evaluation?

<p>Advertising frequency (B)</p> Signup and view all the answers

Which direct marketing channel involves sending an advertisement to an individual consumer?

<p>Direct mail (C)</p> Signup and view all the answers

What is a key characteristic of market-penetration pricing?

<p>It aims for high market share through quickly lowering prices. (D)</p> Signup and view all the answers

Which tool is primarily used to reward frequency and intensity of purchases?

<p>Frequency programs (D)</p> Signup and view all the answers

Which of the following describes non-personal communication channels?

<p>Media that carry messages without personal feedback (C)</p> Signup and view all the answers

What is a significant advantage of mobile marketing?

<p>High segment capacity (C)</p> Signup and view all the answers

Which of the following strategies aims to charge high initial prices based on product quality and image?

<p>Market-skimming pricing (A)</p> Signup and view all the answers

Which term refers to short-term incentives aimed at encouraging purchases?

<p>Sales promotion (A)</p> Signup and view all the answers

What is the main goal of persuasive advertising objectives?

<p>To stimulate preference for the product (A)</p> Signup and view all the answers

In pricing for captive products, how are the main product and consumables typically priced?

<p>The main product is priced low, while consumables are priced high. (A)</p> Signup and view all the answers

What is NOT a component of program development for a marketing promotion?

<p>Complete consumer surveys (A)</p> Signup and view all the answers

What are the challenges of the affordable method for setting a budget?

<p>Ignoring effects on sales and long-term planning (C)</p> Signup and view all the answers

What is the main advantage of discount and allowance pricing strategies?

<p>They incentivize larger purchases or early payments. (A)</p> Signup and view all the answers

Which of the following is a method to promote corporate identity?

<p>Corporate identity materials (A)</p> Signup and view all the answers

What is a common ethical issue in direct marketing?

<p>Invasion of privacy (B)</p> Signup and view all the answers

Which condition is essential for successful market-skimming pricing?

<p>High quality and a positive image of the product. (C)</p> Signup and view all the answers

What is psychological pricing focused on when setting prices?

<p>The perception and psychology behind consumer purchasing behavior. (A)</p> Signup and view all the answers

Which of the following methods is NOT typically associated with the sales process?

<p>Market segmentation (D)</p> Signup and view all the answers

What does the geographical pricing strategy primarily address?

<p>Adjusting prices to account for varying purchasing powers in different regions. (D)</p> Signup and view all the answers

What type of advertising is characterized by small rectangular ads on websites?

<p>Banner or display ads (A)</p> Signup and view all the answers

Which tool involves offering an amount in exchange for retailer presentation?

<p>Bonus (C)</p> Signup and view all the answers

Which of the following best describes pricing for by-products?

<p>A combination of a low fixed fee and variable usage rates. (C)</p> Signup and view all the answers

What is the risk associated with promotional pricing strategies?

<p>Setting unrealistic price expectations among consumers. (B)</p> Signup and view all the answers

Which factor does NOT influence the timing of a marketing promotion?

<p>Employee turnover rates (D)</p> Signup and view all the answers

In what context is pricing for optional products most commonly applied?

<p>To determine prices for accessories or add-ons to main products. (B)</p> Signup and view all the answers

Which of these is a characteristic of search ads?

<p>Targeted advertisements based on consumer behavior (B)</p> Signup and view all the answers

What is NOT a function of public relations?

<p>Sales forecasting (B)</p> Signup and view all the answers

Why is it essential to study competitors' pricing when establishing pricing for product lines?

<p>To refine the differences in perceived quality among competing products. (C)</p> Signup and view all the answers

What is the primary goal of bundle product pricing strategies?

<p>To provide a reduced price for a combination of products. (D)</p> Signup and view all the answers

Which of the following is a consideration in the program assessment stage?

<p>Sales data (D)</p> Signup and view all the answers

What role does the cost-production volume ratio play in market-skimming pricing?

<p>It helps justify higher initial prices by ensuring profitability. (A)</p> Signup and view all the answers

Which of the following is a potential drawback of discount pricing strategies?

<p>They can create a temporary spike in sales with lasting negative impacts. (C)</p> Signup and view all the answers

What is the primary condition for implementing differential pricing?

<p>There must be a clear difference in perceived value. (A)</p> Signup and view all the answers

How is segmented pricing defined?

<p>Selling at two or more prices without cost differences. (B)</p> Signup and view all the answers

Which of these price endings is typically seen as suggesting a discount?

<p>Ending in 9 (B)</p> Signup and view all the answers

What can motivate the initiation of a price increase?

<p>Increased profits objectives. (B)</p> Signup and view all the answers

In a market where there are few companies, how are competitors likely to react to price changes?

<p>They consistently follow similar price adjustments. (C)</p> Signup and view all the answers

What is a key reason manufacturers delegate sales activities to other channel members?

<p>More cost-effective operations. (C)</p> Signup and view all the answers

Which function does NOT belong to the main roles of distribution channels?

<p>Manufacturing products directly for consumers. (A)</p> Signup and view all the answers

What defines a direct distribution channel?

<p>It has no intermediary levels. (C)</p> Signup and view all the answers

Which factor is NOT a conditioning factor for distribution channel structure?

<p>The number of sales staff employed. (D)</p> Signup and view all the answers

What is one of the main reasons for anticipating competitors' responses?

<p>To adjust marketing strategies accordingly. (B)</p> Signup and view all the answers

Which type of differential pricing involves varying prices based on packaging?

<p>Pricing by image. (B)</p> Signup and view all the answers

What is meant by 'channel length' in distribution channels?

<p>The number of intermediary levels. (A)</p> Signup and view all the answers

How do consumers typically process prices according to the odd-number pricing strategy?

<p>From left to right, favoring odd-number pricing. (B)</p> Signup and view all the answers

Which of the following best describes the 'pricing by location' strategy?

<p>Adjusting ticket prices based on seat preference in theaters. (A)</p> Signup and view all the answers

What is the primary focus of Integrated Marketing Communication (IMC)?

<p>Delivering a clear and consistent message across communication channels (A)</p> Signup and view all the answers

Which of the following is NOT one of the 12 elements identified in Borden's marketing mix?

<p>Segmentation (C)</p> Signup and view all the answers

In the communication process, what does 'decoding' refer to?

<p>The receiver's interpretation of the encoded message (C)</p> Signup and view all the answers

What is a limitation of seeing communication as merely a persuasive function?

<p>It ignores the broader aspects of communication, such as listening and responding. (A)</p> Signup and view all the answers

What does the 'noise' component in the communication process refer to?

<p>A distraction that interferes with message transmission (B)</p> Signup and view all the answers

Which stage in the communication planning process involves determining who the messaging is aimed at?

<p>Identifying the target audience (C)</p> Signup and view all the answers

According to Kotler's definition, what does IMC focus on?

<p>Integration of various communication channels to deliver a cohesive message (D)</p> Signup and view all the answers

In the context of message strategy, which of the following is NOT a focus area?

<p>Certain unsaid truths about competitors (A)</p> Signup and view all the answers

What is the intended outcome of achieving synergies in IMC?

<p>To produce results greater than the sum of individual communication efforts (C)</p> Signup and view all the answers

What is an example of a transactional view in marketing?

<p>Communication that focuses solely on immediate sales (B)</p> Signup and view all the answers

Which of the following strategies is a component of the creative strategy in communication planning?

<p>Deciding the emotional tone of the message (C)</p> Signup and view all the answers

What was the main contribution of McCarthy in the context of the marketing mix?

<p>Creating the 4 Ps model (D)</p> Signup and view all the answers

Which statement about feedback in the communication process is true?

<p>Feedback is part of the receiver's response that goes back to the sender. (D)</p> Signup and view all the answers

What does 'exclusive distribution' refer to in channel alternatives?

<p>Limiting the number of intermediaries to ensure intensive sales efforts. (D)</p> Signup and view all the answers

Which characteristic is NOT a service result produced by the distribution channels?

<p>Brand awareness (B)</p> Signup and view all the answers

What is one key aspect of evaluating channel alternatives?

<p>Control over the product (C)</p> Signup and view all the answers

What type of channel alternative involves independent companies collaborating through contracts?

<p>Contractual systems (A)</p> Signup and view all the answers

What does 'intensive distribution' aim to achieve?

<p>Maximum product availability in many locations. (B)</p> Signup and view all the answers

How do horizontal systems create advantages?

<p>By combining resources of companies at the same level. (A)</p> Signup and view all the answers

Which type of retailer sells directly to the final consumer?

<p>Merchant (A)</p> Signup and view all the answers

What primarily influences the channel objectives set by companies?

<p>Product characteristics and market segments (C)</p> Signup and view all the answers

Which of the following is NOT a type of non-store retailer?

<p>Warehouse clubs (D)</p> Signup and view all the answers

What is a key feature of administered channel systems?

<p>Dependence on one party's size and power. (C)</p> Signup and view all the answers

What do channel members typically expect in terms of territorial rights?

<p>Exclusive rights within defined areas. (D)</p> Signup and view all the answers

What is a characteristic of selective distribution?

<p>Uses a few intermediaries to achieve adequate coverage. (B)</p> Signup and view all the answers

Which of the following is NOT a function of wholesalers?

<p>Direct sales to consumers (B)</p> Signup and view all the answers

What does the term 'channel flexibility' refer to?

<p>The capacity to adapt to changing market demands. (A)</p> Signup and view all the answers

Which of the following best describes 'multichannel systems'?

<p>Systems that offer increased sales through various channels. (A)</p> Signup and view all the answers

Flashcards

What is price?

The amount of money customers pay for a product or service. It reflects the value they exchange for its benefits.

Price components

The total cost to the company, including monetary and non-monetary factors, and the benefits customers receive, both tangible and intangible.

Value-based pricing

A strategy where companies prioritize offering greater value to customers than competitors, even if it means charging a premium price.

Value-based pricing

Setting a price that is directly related to the value perceived by the customer.

Signup and view all the flashcards

Pricing strategy

Utilizing price as a primary method of impacting sales and profits quickly and flexibly.

Signup and view all the flashcards

Modifying price

Adjusting price by modifying factors such as quality, quantity, delivery time, or payment method.

Signup and view all the flashcards

Common pricing mistake

Reducing price to secure a sale without establishing the value of the product.

Signup and view all the flashcards

Common pricing mistake

Failing to regularly review pricing based on market changes and competitor activity.

Signup and view all the flashcards

Good-value pricing

Pricing strategy where companies offer a product or service with a good combination of quality and service at a fair price.

Signup and view all the flashcards

Value-added pricing

Pricing strategy where companies add extra features and services to differentiate their products and charge higher prices.

Signup and view all the flashcards

Cost-based pricing

Pricing method based on the costs involved in producing, distributing, and selling a product plus a fair profit margin.

Signup and view all the flashcards

Experience curve

The decrease in average production cost per unit as production volume increases.

Signup and view all the flashcards

Cost-plus pricing

A cost-based pricing approach where a standard markup is added to the unit cost.

Signup and view all the flashcards

Break-even point

The point where total revenue equals total costs, resulting in no profit or loss.

Signup and view all the flashcards

Competition-based pricing

Setting prices based on competitors' strategies, prices, costs, and market offerings.

Signup and view all the flashcards

Elastic demand

When the demand for a product changes significantly with small price changes.

Signup and view all the flashcards

Inelastic demand

When the demand for a product changes very little with small price changes.

Signup and view all the flashcards

Survival pricing

A pricing strategy focused on surviving the competition.

Signup and view all the flashcards

Profit maximization pricing

A pricing strategy that aims to maximize current profits by understanding demand and costs.

Signup and view all the flashcards

Market share maximization pricing

A pricing strategy that aims to gain maximum market share by offering lower prices.

Signup and view all the flashcards

Market skimming pricing

A pricing strategy that sets high prices to maximize profits from early adopters of a new product.

Signup and view all the flashcards

Product leadership pricing

A pricing strategy that sets high prices to communicate a product's quality and exclusivity.

Signup and view all the flashcards

Pricing and positioning

Pricing decisions are influenced by the company's overall marketing strategy and goals.

Signup and view all the flashcards

Market-Skimming

A pricing strategy where the initial price is set high to maximize profits from early adopters, with the price gradually decreasing over time.

Signup and view all the flashcards

Market-Penetration

A pricing strategy where the initial price is set low to rapidly gain market share and discourage competitors.

Signup and view all the flashcards

Pricing for product lines

Setting different price levels for all products within a product line, considering factors like cost differences, customer perception, and competitive pricing.

Signup and view all the flashcards

Pricing for optional products

Pricing strategy for products that are optional or accessory to the main product, like accessories or excursions.

Signup and view all the flashcards

Pricing for captive products

A pricing strategy where the main product is priced low, while consumables or supplementary services are priced high, aiming to generate profits through recurring purchases.

Signup and view all the flashcards

Pricing for by-products

A pricing strategy where a fixed fee is charged upfront, followed by variable fees based on usage, like phone bills.

Signup and view all the flashcards

Pricing for bundle products

Combining different products and offering them at a reduced price, like restaurant menus or software bundles.

Signup and view all the flashcards

Geographical pricing

Adapting prices for different locations based on factors like transportation costs, competition, and local market conditions.

Signup and view all the flashcards

Discounts

Price reductions offered for purchases within a specific time frame, quantities, or for specific customer groups.

Signup and view all the flashcards

Allowances

Promotional money paid by manufacturers to retailers for featuring their products.

Signup and view all the flashcards

Promotional pricing

Temporary price reductions used to stimulate short-term sales and encourage immediate purchases.

Signup and view all the flashcards

Psychological pricing

Pricing based on the psychological impact of prices on consumers, considering factors such as perception of value and price anchoring.

Signup and view all the flashcards

Reference prices

A standard or expected price that is used as a reference point for comparison when evaluating other prices.

Signup and view all the flashcards

Barter

Strategies that involve the exchange of goods directly, without money or intermediaries.

Signup and view all the flashcards

Compensation arrangement

A payment arrangement where a portion is made in cash and the rest in goods or services.

Signup and view all the flashcards

Horizontal Conflict

A channel conflict that occurs between members at the same level within a distribution channel, such as two competing retailers.

Signup and view all the flashcards

Vertical Conflict

A channel conflict that occurs between different levels within the same distribution channel, such as a conflict between a manufacturer and a retailer.

Signup and view all the flashcards

Multi-channel Conflict

A channel conflict that occurs when a manufacturer uses multiple distribution channels to reach the same target market, leading to potential competition between these channels.

Signup and view all the flashcards

Desintermediation

The process by which a manufacturer eliminates intermediaries in the distribution channel, often by selling directly to consumers.

Signup and view all the flashcards

Marketing Logistics

The planning, implementation, and control of the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.

Signup and view all the flashcards

Supply Chain Management

The process of managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.

Signup and view all the flashcards

Outbound Logistics

The movement of goods from the factory to the final customers.

Signup and view all the flashcards

Inbound Logistics

The movement of raw materials and materials from suppliers to the factory.

Signup and view all the flashcards

Reverse Logistics

The process of returning spoiled, unwanted or surplus products.

Signup and view all the flashcards

Warehousing

The process of storing goods in warehouses.

Signup and view all the flashcards

Inventory Management

The process of managing the stock levels of products.

Signup and view all the flashcards

Transportation

The process of transporting goods from one point to another.

Signup and view all the flashcards

Logistics Information Management

The system of gathering, processing, and distributing information about goods in the supply chain.

Signup and view all the flashcards

Marketing Communications

The means by which companies try to inform, persuade, and remind consumers about the value proposition they offer.

Signup and view all the flashcards

Marketing Communications Mix

The specific blend of communication tools used by a company to communicate customer value and build relationships, including advertising, public relations, sales promotion, personal selling, and direct and digital marketing.

Signup and view all the flashcards

Customer segmentation by channel

Analyzing customer preferences to group them based on their preferred buying methods.

Signup and view all the flashcards

Desired lot size

The quantity of items a customer is allowed to purchase through a specific channel.

Signup and view all the flashcards

Waiting and delivery time

The time it takes for a customer to receive their order after placing it.

Signup and view all the flashcards

Convenience of points of sale

How easy it is for customers to purchase products through a particular channel.

Signup and view all the flashcards

Product variety

The variety of products available through a specific channel.

Signup and view all the flashcards

Support services

Additional services offered alongside the core product, such as credit, delivery, or installation.

Signup and view all the flashcards

Distribution channel goals

The specific level of service a company aims to provide through its distribution channels, taking into account costs and required support.

Signup and view all the flashcards

Types of intermediaries

Identifying the types of businesses or individuals involved in distributing a product (e.g. own sales force, independent agents).

Signup and view all the flashcards

Number of intermediaries

The number of businesses or individuals involved in the distribution process.

Signup and view all the flashcards

Conditions and responsibilities of channel members

The specific terms and responsibilities agreed upon between a company and its channel partners.

Signup and view all the flashcards

Agents

Businesses that act as intermediaries by connecting buyers and sellers without taking ownership of the product.

Signup and view all the flashcards

Merchants: Wholesalers

Businesses that take ownership of products and resell them to retailers or other wholesalers.

Signup and view all the flashcards

Merchants: Retailers

Businesses that sell directly to the final consumer.

Signup and view all the flashcards

Exclusive distribution

A distribution strategy where a company limits the number of intermediaries, ensuring more intensive sales efforts and higher control.

Signup and view all the flashcards

Selective distribution

A distribution strategy where a company selects a limited number of intermediaries, balancing market coverage and control.

Signup and view all the flashcards

Transactional Perspective

Marketing focuses on achieving transactional goals, like gaining new customers and making immediate sales.

Signup and view all the flashcards

Relationship Perspective

Marketing prioritizes building long-term relationships with customers, focusing on loyalty and trust.

Signup and view all the flashcards

Communication as Core Element

Communication becomes the central force behind building successful relationships and delivering value.

Signup and view all the flashcards

Integrated Marketing Communication (IMC)

The concept of coordinating all marketing communication tools to ensure a consistent brand message across channels.

Signup and view all the flashcards

Message Strategy

A message strategy identifies the central theme or idea that connects to the brand's positioning, focusing on product performance or extrinsic attributes.

Signup and view all the flashcards

Creative Strategy

A creative strategy determines how the message is communicated, whether through rational, emotional, or a blend of both approaches.

Signup and view all the flashcards

Informative Message

Presenting the product's features and benefits in a factual and informative manner.

Signup and view all the flashcards

Transformational Message

Evoking emotions and creating a positive association with the brand, often using humor, love, joy, or fear.

Signup and view all the flashcards

Sender

The party or organization sending the message, like a company or brand.

Signup and view all the flashcards

Coding

The process of translating thoughts and ideas into a form that can be transmitted, like a written ad or a video.

Signup and view all the flashcards

Message

The set of symbols used to communicate the message, like words, images, or sounds.

Signup and view all the flashcards

Medium/Media

The channel through which the message travels, like television, social media, or print.

Signup and view all the flashcards

Decoding

The process of assigning meaning to the symbols received by the receiver, like interpreting the message of an advertisement.

Signup and view all the flashcards

Receiver

The individual or group receiving the message, like a potential customer or target audience.

Signup and view all the flashcards

Response

The audience's reaction to the message, like visiting a website, making a purchase, or sharing information.

Signup and view all the flashcards

Credibility of source

The source's expertise, reliability, and likeability influence how credible it is.

Signup and view all the flashcards

Expertise

Specialized knowledge makes a source more believable.

Signup and view all the flashcards

Reliability

An honest and objective source is more reliable.

Signup and view all the flashcards

Likeability

An attractive source is more likeable.

Signup and view all the flashcards

Personal Communication Channels

Direct communication channels allow for feedback and interaction.

Signup and view all the flashcards

Non-Personal Communication Channels

Indirect communication channels reach a larger audience, but lack immediate feedback.

Signup and view all the flashcards

Communication Budget

The budget sets the financial limits for communication efforts.

Signup and view all the flashcards

Affordable Method

The affordable method sets a budget based on what the company can afford.

Signup and view all the flashcards

Percentage of Sales

The percentage-of-sales method sets the budget as a percentage of sales.

Signup and view all the flashcards

Competitive-Parity

The competitive-parity method sets the budget based on competitor spending.

Signup and view all the flashcards

Objective-and-Task

The objective-and-task method sets the budget based on specific communication goals.

Signup and view all the flashcards

Push Strategy

Push strategy uses sales force and trade promotion to drive products to consumers.

Signup and view all the flashcards

Pull Strategy

Pull strategy uses advertising and other content to attract consumers towards the product.

Signup and view all the flashcards

Advertising Objectives

Advertising aims to inform, persuade, recall, and reinforce.

Signup and view all the flashcards

Advertising Budget Drivers

Factors like product life cycle, market share, and competition influence advertising budget.

Signup and view all the flashcards

Differential Pricing

A pricing strategy where a product or service is sold at different prices, not based on cost differences, but rather on factors like customer type, location, or time. For example, a museum might offer discounted tickets to students.

Signup and view all the flashcards

Product-Version Pricing

A type of differential pricing where different versions of a product are offered at different prices, regardless of cost differences. This can involve features, quality, or packaging.

Signup and view all the flashcards

Pricing by Image

This involves pricing a product based on its packaging or brand image. Think about how a generic medication may cost less than a name-brand version despite being the same drug.

Signup and view all the flashcards

Pricing by Channel

A pricing strategy that uses different prices for the same product depending on the distribution channel used. For example, a fast food restaurant may charge more for a burger than a vending machine.

Signup and view all the flashcards

Pricing by Location

This type of pricing utilizes different prices for a product based on its location. Airlines use this by charging more for seats closer to the front or in first class compared to economy.

Signup and view all the flashcards

Pricing by Time

A pricing strategy where prices fluctuate based on time, such as season, day, or time of day. Stores often offer sales during peak seasons to capitalize on demand.

Signup and view all the flashcards

Price Reduction Initiation

A price reduction initiated by a company due to various factors like overcapacity, decreasing market share, or an objective of market dominance. For example, Dell may reduce prices on its personal computers during a sales promotion.

Signup and view all the flashcards

Price Increase Initiation

A price increase implemented by a company for reasons like boosting profits, covering increased costs, or due to high demand. To avoid consumer backlash, companies may employ communication strategies or separate the product to justify the price increase.

Signup and view all the flashcards

Anticipating Competitors' Responses

The process of understanding how competitors will respond to a pricing change, considering factors like the number of competitors, product homogeneity, and buyer awareness.

Signup and view all the flashcards

Responding to Competitors' Price Changes

Analyzing factors like the product's stage of development, importance in the company's portfolio, competitor intentions, market sensitivity, and cost behavior to determine how best to respond to a competitor's price change.

Signup and view all the flashcards

Commercial Distribution

A strategic variable that encompasses the activities required to ensure goods and services are readily available to consumers at the right time, place, and form for fulfilling their needs.

Signup and view all the flashcards

Main Functions of a Distribution Channel

The central functions of a distribution channel involve tasks like gathering information about the market, developing marketing communications, negotiating prices, placing product orders, managing inventory, and facilitating physical product movement.

Signup and view all the flashcards

Channel Level

The different intermediaries or layers involved in getting a product to the final consumer. Each level handles a specific task like wholesale, retail, or online sales.

Signup and view all the flashcards

Channel Length

The number of intermediary levels involved in a distribution channel. It's direct if there are no intermediaries and indirect if there are one or more intermediaries.

Signup and view all the flashcards

Direct Channel

A distribution channel that eliminates any intermediaries between the producer and the final consumer. This involves direct sales by the producer.

Signup and view all the flashcards

Indirect Channel

A distribution channel that includes one or more intermediary levels like wholesalers or retailers. These channels involve multiple parties before reaching the final buyer.

Signup and view all the flashcards

Public relations

A marketing strategy aiming to improve a company's image or its products in the eyes of the public.

Signup and view all the flashcards

Samples

A promotional tool that involves providing a small quantity of a product for free to encourage trial.

Signup and view all the flashcards

Direct marketing

A communication strategy that uses direct-to-consumer channels to reach customers and deliver goods or services without intermediaries.

Signup and view all the flashcards

Coupons

A type of incentive that offers a discount on a purchase.

Signup and view all the flashcards

Customer loyalty programs

A marketing technique that focuses on building relationships with customers to encourage repeat business.

Signup and view all the flashcards

Online marketing

A strategy that leverages various online channels to reach customers and drive sales.

Signup and view all the flashcards

Search ads

A type of online advertising that allows businesses to pay for placement on search engine results pages.

Signup and view all the flashcards

Banner or Display Ads

A type of online advertising that utilizes banner ads placed on websites.

Signup and view all the flashcards

Email Marketing

A type of online marketing that involves sending promotional emails directly to customers.

Signup and view all the flashcards

Social media marketing

A marketing strategy that involves engaging customers on social media platforms.

Signup and view all the flashcards

Online communities and forums

A type of social media where users create online communities and share information.

Signup and view all the flashcards

Blogs

A type of social media that comprises regularly updated online journals.

Signup and view all the flashcards

Mobile marketing

A type of mobile marketing that involves sending messages to mobile phones using various technologies.

Signup and view all the flashcards

Sales force management

The process of managing a team of salespeople who are responsible for closing deals and building customer relationships.

Signup and view all the flashcards

Sales process

An organized set of steps used to guide salespeople through the process of selling products or services.

Signup and view all the flashcards

Study Notes

Price

  • Price is the amount of money exchanged for a product or service, reflecting the value customers receive.
  • Includes monetary and non-monetary costs for the firm, and tangible and intangible benefits for the customer.
  • Affects sales and profits directly, acting as a competitive tool.
  • Generates revenue (units sold x price) and influences consumer perception and demand.
  • A key indicator of product quality.
  • Price sensitivity determines activity level.

Price Modification

  • Influenced by factors like price itself, quality, quantity, discounts, delivery, payment methods, and brand name.

Pricing Mistakes

  • Price reductions for sales instead of emphasizing value.
  • Cost-oriented pricing instead of customer value-driven pricing.
  • Disconnected pricing from other marketing strategies.
  • Neglecting pricing as a positioning tool.
  • Insufficient price adjustments for different items, market segments, etc.

Pricing Methods

Value-Based Pricing

  • Links value proposition with customer perception.
  • Other marketing mix elements (like advertising) enhance value perception.
  • Success involves delivering more value than competitors.
  • Requires understanding customer decision-making.
Good-Value Pricing
  • Offers quality/service at a fair price.
  • Examples: Mercedes-Benz CLA, ALDI.
Value-Added Pricing
  • Adds value-enhancing features and services to justify higher prices.
    • Example: Bose headphones

Cost-Based Pricing

  • Sets prices based on production, distribution, and selling costs plus desired profit.
  • Considers different production levels and experience curves (cost reduction).
  • Includes cost-plus pricing (markup added to costs) and break-even/target profit pricing.

Competition-Based Pricing

  • Bases pricing on competitor strategies, prices, and market offerings.
  • Common in oligopolistic industries where price matching is prevalent.
  • Small companies may follow the leader.

Internal and External Considerations

  • Marketing strategy, organizational structure (who sets price), market conditions, economics (price elasticity of demand), and external factors (political, economic, social, technological, ecological, legal).

Pricing as a Positioning Tool

  • Pricing is linked to positioning.
  • Key objectives can include survival, profit maximization, market share maximization (e.g., market skimming, market penetration), product leadership, or other objectives based on the company's nature.

Pricing Strategies for New Products

Market-Skimming

  • High initial prices to extract revenue from segments willing to pay a premium.
  • Example: New iPhone models.

Market-Penetration

  • Low initial prices to quickly gain market share.
  • Example: Prime Video.

Product Mix Strategies

  • Prices for product lines, optional products, captive products, by-products, and bundled products require a strategy.

Pricing Adjustments

  • Geographical pricing, discount and allowance pricing, promotional pricing, psychological pricing, and differential/segmented pricing for varying customer segments, locations, or times.

Price Changes

  • Price reductions can be due to overcapacity or market dominance.
  • Price increases can be caused by profit targets, cost increases, or over-demand.

Distribution

  • Channels bring products to consumers efficiently and effectively, influencing all components of the marketing mix.
  • Manufacturers use intermediaries to decrease costs and increase efficiency, experience, specialization, and scale.

Channel Design Decisions

  • Identify customer needs and wants, establish goals and constraints, identify possible channel alternatives, and evaluate these alternatives on economic, control, and adaptability factors.
  • A channel can be direct, with no intermediate steps, or indirect, using intermediaries like agents or merchants (e.g., wholesalers, retailers): Types and numbers of intermediaries.

Channel Integration

  • Corporate (ownership), administered (size and power), and contractual (e.g., franchising) systems coordinate the channel.

Channel Relationships

  • Conflict can arise horizontally among channel members at the same level or vertically between different levels in a channel.

Physical Distribution

  • Logistics plans, implements, and controls the physical movement of products to meet customer needs.
  • Supply chain management handles upstream and downstream flow to consumers.

Communication

  • Communication is the voice of the brand, informing, persuading, and reminding consumers of value propositions in relationships.

Communication Mix Elements

  • Includes advertising, sales promotion, public relations, direct/digital marketing, mobile marketing, and personal selling to build customer relationships.

Communication Planning

  • Key steps include identifying the target audience, defining objectives (e.g., awareness, knowledge, and purchase), designing communications (which include message, creative development, source), selecting channels, setting the budget, and measuring results
  • Consideration for different communication media and tools for achieving specific objectives (e.g., push/pull strategies).

Advertising

  • The goal is to create awareness, persuade, recall, or reinforce brand images or messages to the target audience.
  • Understanding the campaign's scope, frequency, and impact is critical in planning.

Sales Promotion

  • Includes tools like samples, coupons, refunds, discounts, gift offers, and contests to encourage immediate sales and user trial.

Public Relations

  • Aims to promote/protect a company's image through activities like press relations, events, sponsorship, and public service activities to generate credibility with the public.

Direct Marketing

  • Direct communication with individuals using direct channels (e.g., mail, catalogs) to elicit a response.

Sales Force

  • Sales processes entail identifying potential customers, initial contact, presentation, addressing objections, closing, and post-sale follow-up and maintenance.

Online Marketing

  • Diverse techniques used for online communications and customer engagement (websites, search ads, display ads, email, social media, mobile marketing, etc.).

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Description

This quiz explores the essential concepts of pricing, including fundamental pricing strategies and methods such as value-based pricing. Understand the importance of price in reflecting product quality and influencing consumer behavior. Additionally, it covers common pricing mistakes and the factors that affect price modifications.

More Like This

Value-Based Pricing Methods in Marketing
10 questions

Value-Based Pricing Methods in Marketing

EnthralledDecagon avatar
EnthralledDecagon
Marketing Pricing Strategies Quiz
10 questions

Marketing Pricing Strategies Quiz

SlickLyric avatar
SlickLyric
Marketing Pricing Strategies
32 questions

Marketing Pricing Strategies

WelcomeCottonPlant avatar
WelcomeCottonPlant
Pricing Strategies and Value-Based Pricing
48 questions

Pricing Strategies and Value-Based Pricing

ReasonedMoldavite9329 avatar
ReasonedMoldavite9329
Use Quizgecko on...
Browser
Open
Browser
Browser