Podcast
Questions and Answers
What does value-based pricing rely on?
What does value-based pricing rely on?
- Buyers' perception of value (correct)
- Market demand only
- Competitors' pricing strategies
- The seller's cost of production
Which pricing strategy minimizes price competition by ensuring sellers are certain about costs?
Which pricing strategy minimizes price competition by ensuring sellers are certain about costs?
- Market-penetration pricing
- Cost-plus pricing (correct)
- Good-value pricing
- Value-added pricing
What is the primary goal of market-skimming pricing?
What is the primary goal of market-skimming pricing?
- To attract price-sensitive customers
- To maximize profit through high prices (correct)
- To encourage frequent purchases
- To ensure low prices in competitive markets
Which pricing strategy involves charging a constant everyday low price?
Which pricing strategy involves charging a constant everyday low price?
What is a disadvantage of cost-based pricing?
What is a disadvantage of cost-based pricing?
Optional-product pricing is primarily used for which of the following?
Optional-product pricing is primarily used for which of the following?
Product line pricing sets different prices based on what criteria?
Product line pricing sets different prices based on what criteria?
Which pricing strategy is most suitable for price-sensitive markets?
Which pricing strategy is most suitable for price-sensitive markets?
What is the essence of good-value pricing?
What is the essence of good-value pricing?
Which of the following reflects the 4Cs relevant to pricing strategy?
Which of the following reflects the 4Cs relevant to pricing strategy?
Flashcards
Price
Price
The amount of money charged for a product or service. It's also the sum of all the values customers exchange for the benefits of having or using it.
Value-based Pricing
Value-based Pricing
A pricing strategy that focuses on the buyer's perception of value rather than the seller's cost. It's customer-driven.
Customer Value Pricing
Customer Value Pricing
A pricing strategy focused on matching the price to the perceived value of the product, not its production costs.
Good-Value Pricing
Good-Value Pricing
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Everyday Low Pricing (EDLP)
Everyday Low Pricing (EDLP)
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High-Low Pricing
High-Low Pricing
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Value-Added Pricing
Value-Added Pricing
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Cost-Plus Pricing
Cost-Plus Pricing
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Competition-Based Pricing
Competition-Based Pricing
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Market-Skimming Pricing
Market-Skimming Pricing
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Study Notes
Pricing Strategies
- Price: The amount paid for a product or service, encompassing all value exchanged for its benefits.
- 4Cs in Pricing: Factors to consider when setting prices: customers, current positioning, competitors, and costs.
- Value-Based Pricing: Determines price based on the perceived value by the customer, rather than the seller's cost. This is customer-driven.
- Cost-Based Pricing: Price is set based on the product's cost. This is product-driven. Price matches perceived value instead of cost.
- Good-Value Pricing: Offers a balance of quality, service, and price.
- Everyday Low Pricing (EDLP): Consistent low prices without temporary discounts.
- High-Low Pricing: Regular higher prices combined with promotions to lower prices.
- Value-Added Pricing: Adds features or services to a product to justify a higher price.
Cost-Based Pricing
- Cost-Plus Pricing: Adds a standard markup to product cost. This assumes sellers know their costs.
- Benefits of Cost-Plus Pricing: Certain cost information, minimized price competition.
Other Pricing Strategies
- Market-Skimming: Introduces a high price for a new product initially to maximize profit. Quality and image are essential to sustain the high price.
- Market-Penetration: Initial low price to maximize sales quickly. Costs decrease with larger sales volumes.
- Product Line Pricing: Sets price steps across a product line based on cost differences, customer valuation, and competitor pricing.
- Optional Product Pricing: Pricing of extra accessories or add-ons sold with the main product (e.g., phone and its case).
- Captive Product Pricing: Pricing of products that are needed for a main product (e.g., inexpensive printer and expensive ink).
- By-Product Pricing: Selling additional/secondary products gained from producing another product, for added revenue.
- Product Bundle Pricing: Packaging multiple products together at a discounted price.
- Discount Pricing: A straight reduction from base price to incentivize sales.
- Allowance: Money paid by manufacturers to retailers in exchange for favored treatment.
- Psychological Pricing: Setting the price in a way that conveys specific product attributes (e.g., "ending in .99").
- Promotional Pricing: Short-term price reductions to boost sales.
- Segmented/Differentiated Pricing: Creating price differences for segments of customers based on factors like location, time, or product type, without changing costs.
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