Pricing Strategies Quiz
21 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

Which of the following are conditions to apply Skimming Pricing?

  • The market must be highly price sensitive.
  • The product's quality and image must support its higher price and enough buyers must want the product at that price. (correct)
  • The cost of producing a smaller volume cannot be so high that they cancel the advantage of charging more. (correct)
  • Competitors should not be able to enter the market easily and undercut the high price. (correct)

    • Which of the following are conditions to apply Penetration Pricing?

  • The product's quality and image must support its higher price and enough buyers must want the product at that price.
  • The cost of producing a smaller volume cannot be so high that they cancel the advantage of charging more.
  • Competitors should not be able to enter the market easily and undercut the high price.
  • The market must be highly price sensitive. (correct)

    • What is Product Line Pricing?

  • Setting a price for by-products in order to make the main product's price more competitive.
  • Setting a price for products that must be used along with a main product.
  • The pricing of optional or accessories products along with a main product.
  • Setting the price steps between various products in a product line based on cost differences between the products, customer evaluation of different features, and competitors' prices. (correct)

    • What is Optional-product Pricing?

    <p>The pricing of optional or accessories products along with a main product.</p> Signup and view all the answers

    What is Captive-product Pricing?

    <p>Setting a price for products that must be used along with a main product.</p> Signup and view all the answers

    What is By-product Pricing?

    <p>Setting a price for by-products in order to make the main product's price more competitive.</p> Signup and view all the answers

    What is Product Bundle?

    <p>Pricing Combining several products and offering the bundle at a reduced price.</p> Signup and view all the answers

    What is Discount?

    <p>A straight reduction in price on purchases during a stated period of time.</p> Signup and view all the answers

    What is Allowance?

    <p>Promotional money paid by manufacturer to retailers in return for an agreement to feature the manufacturer's products in some way.</p> Signup and view all the answers

    What is Segmented Pricing?

    <p>Selling a product or service at two or more prices, where the difference in prices is not based on differences in cost.</p> Signup and view all the answers

    What is Psychological Pricing?

    <p>A pricing approach that considers the psychology of prices and not simply the economics, the price is used to say something about the product.</p> Signup and view all the answers

    What is Promotional Pricing?

    <p>Temporarily pricing products below the list price and sometimes even below cost, to increase short-run sales, to create buying excitement and urgency.</p> Signup and view all the answers

    What is FOB-Origin Pricing?

    <p>A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.</p> Signup and view all the answers

    What is Uniform-delivered Pricing?

    <p>A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their locations.</p> Signup and view all the answers

    What is Zone Pricing?

    <p>A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the high he price..</p> Signup and view all the answers

    What is Basing-point Pricing?

    <p>A geographical pricing strategy in which the seller designate some city as a basing point and charges all customers the freight cost from that city to the customer.</p> Signup and view all the answers

    What is Freight-absorption Pricing?

    <p>A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business.</p> Signup and view all the answers

    What is Dynamic Pricing?

    <p>Adjusting price continually to meet the characteristics and needs of individual customers and situations.</p> Signup and view all the answers

    What are some examples of International Pricing?

    <p>Most companies adjust their prices to reflect local market conditions and cost considerations.</p> Signup and view all the answers

    What are some reasons for price cuts?

    <p>Excess capacity, Falling demand, To use 'low-price' as a promotion.</p> Signup and view all the answers

    What are some reasons for price increases?

    <p>To improve profit, Cost inflation, Over demand</p> Signup and view all the answers

    Study Notes

    Pricing Strategies

    • Market Skimming Pricing: Setting a high initial price for a new product to maximize revenue from those willing to pay it; the company makes fewer but more profitable sales.

      • Conditions for successful skimming: the product's quality/image must support the price, production costs of lower volumes aren't too high to negate the price advantage, and competitors should not easily enter the market.

    • Penetration Pricing: Setting a low initial price for a new product to attract a large number of customers and capture a large market share.

      • Conditions for successful penetration: the market is highly price-sensitive, production costs decrease with increasing volume, a low price must deter competition.

    Product Mix Strategies

    • Product Line Pricing: Setting price steps between different products in a product line, based on cost differences, customer evaluations of features, and competitor prices.

    • Optional-Product Pricing: Pricing additional or accessory products sold along with the main product.

    • Captive-Product Pricing: Pricing products that must be used with another product (e.g., razor blades, printer ink).

    • By-product Pricing: Pricing by-products to increase competitiveness of the main product.

    Price Adjustment Strategies

    • Discount and Allowance Pricing: Offering discounts or allowances (e.g., trade-in, promotional) to encourage purchases. Discounts are a straight price reduction, allowances are promotional money to retailers in exchange for promoting the product.

    • Segmented Pricing: Selling a product or service at differing prices to different customer segments, regardless of cost differences. Types include: Customer segment pricing, Product form pricing, Location pricing, and Time pricing.

    • Psychological Pricing: A pricing approach that considers customer psychology, using prices to signal something about the product (e.g., using odd pricing).

    • Promotional Pricing: Temporarily pricing products below the list price to stimulate sales and generate excitement; this may include special event pricing, and low interest financing.

    Geographical Pricing

    • FOB-Origin Pricing: A pricing method where the buyer assumes all freight costs from the factory.

    • Uniform-Delivered Pricing: A pricing strategy wherein the company charges the same price plus freight to all customers regardless of location .

    • Zone Pricing: A pricing approach that divides the market into zones, and charges different, location-based prices for customers in different zones.

    • Basing-Point Pricing: Setting prices based on a specific location, and adding freight costs from that location to the destination.

    • Freight-Absorption Pricing: A pricing strategy where the seller absorbs all or part of the freight charges to get customers.

    Dynamic Pricing

    • A pricing approach that adjusts pricing based on various criteria, characteristics, and needs of the individual customer.

    International Pricing

    • Companies may implement uniform pricing globally or adjust prices to reflect local market conditions and cost considerations.

    Initiating Price Changes

    • Initiating Price Cuts: Reasons include excess capacity, falling demand, promoting sales.

    • Initiating Price Increases: Reasons include increasing profit, cost inflation, and over demand.

    Studying That Suits You

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

    Quiz Team

    Related Documents

    Pricing Strategies PDF

    Description

    Test your knowledge on various pricing strategies such as market skimming, penetration pricing, and product mix strategies. This quiz will help you understand the conditions required for each strategy to be successful and how they can influence consumer behavior and market share.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser