Podcast
Questions and Answers
What is the definition of price?
What is the definition of price?
- The amount of money charged for a product or service (correct)
- The value customers perceive from a product
- The revenue generated from a product
- The total cost of producing a product
Which element in the marketing mix produces revenue ?
Which element in the marketing mix produces revenue ?
- Product
- Promotion
- Place
- Price (correct)
What are the three major pricing strategies ?
What are the three major pricing strategies ?
- Psychological pricing, premium pricing, and discount pricing
- Penetration pricing, skimming pricing, and value pricing
- Dynamic pricing, bundle pricing, and freemium pricing
- Customer value–based pricing, cost-based pricing, and competition-based pricing (correct)
What happens if customers perceive a product's price to be greater than its value ?
What happens if customers perceive a product's price to be greater than its value ?
What is the right pricing strategy ?
What is the right pricing strategy ?
What does customer value-based pricing consider?
What does customer value-based pricing consider?
What are the types of value-based pricing mentioned?
What are the types of value-based pricing mentioned?
What does good-value pricing offer?
What does good-value pricing offer?
What does value-added pricing do to differentiate and charge higher prices?
What does value-added pricing do to differentiate and charge higher prices?
What does cost-based pricing involve setting prices based on?
What does cost-based pricing involve setting prices based on?
What must pricing decisions be coordinated with?
What must pricing decisions be coordinated with?
What are the potential reactions of a competitor to a company's price cut?
What are the potential reactions of a competitor to a company's price cut?
What are the potential responses of a company to a competitor's price cut that is likely to harm its sales and profits?
What are the potential responses of a company to a competitor's price cut that is likely to harm its sales and profits?
What could be a strategic move for a company to improve its position in response to a competitor's price cut?
What could be a strategic move for a company to improve its position in response to a competitor's price cut?
What is a potential action a company might take if a competitor's price cut is likely to harm its sales and profits, and the company does not want to reduce its own price?
What is a potential action a company might take if a competitor's price cut is likely to harm its sales and profits, and the company does not want to reduce its own price?
What could be a potential consequence for a company if it does not consider the reactions of its competitors to its price change?
What could be a potential consequence for a company if it does not consider the reactions of its competitors to its price change?
What is optional-product pricing?
What is optional-product pricing?
When is captive-product pricing used?
When is captive-product pricing used?
What does by-product pricing involve?
What does by-product pricing involve?
What does product bundle pricing involve?
What does product bundle pricing involve?
When is dynamic pricing used?
When is dynamic pricing used?
What are the reasons for price increases according to the text?
What are the reasons for price increases according to the text?
What is target costing?
What is target costing?
What is market-penetration pricing?
What is market-penetration pricing?
What does price elasticity measure?
What does price elasticity measure?
When does market-skimming pricing work effectively?
When does market-skimming pricing work effectively?
What is the impact of economic conditions on pricing strategies?
What is the impact of economic conditions on pricing strategies?
Who sets prices in large companies?
Who sets prices in large companies?
What is customer value based pricing?
What is customer value based pricing?
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Study Notes
Pricing Strategies and Considerations
- Target costing is a technique used by firms to support price-positioning strategies, starting with an ideal selling price and targeting costs to meet the price.
- Some companies emphasize nonprice positions by using other marketing mix tools, rather than focusing on price.
- Luxury smartphone maker, Vertu, places high value in its products and charges premium prices to match that value.
- Management decisions on who should set prices vary by company size and type. Small companies often have top management setting prices, while large companies rely on divisional or product managers. Industries with price as a key factor may have pricing departments reporting to top management or the marketing department.
- Price elasticity measures the sensitivity of demand to changes in price, with inelastic demand showing minimal change and elastic demand showing significant change.
- Economic conditions such as boom or recession, inflation, and interest rates impact pricing strategies. Post-recession consumer frugality has led to responses like price cuts, offering discounts, developing more affordable items, and redefining value propositions.
- External factors like resellers, government, and social concerns must be considered when setting prices to understand their impact on other parties and broader societal considerations.
- New product pricing strategies include market-skimming pricing, where a high price is set to maximize revenues, and market-penetration pricing, where a low price is set to attract a large market share.
- Market-skimming pricing works under certain conditions, such as product quality and image supporting the higher price, and the inability of competitors to easily undercut the high price.
- Market-penetration pricing aims to attract a large number of buyers and a large market share by setting a low price for a new product, resulting in falling costs and potential for further price cuts.
- Several conditions must be met for the market-penetration pricing strategy to work effectively.
- Pricing decisions are influenced by a variety of factors, including the firm's size, type, industry, economic conditions, and external environmental factors.
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