Pricing the product
30 important questions on Pricing the product
What are the 6 steps in price planning?
- Estimate Demand
- Determine Costs
- Evaluate the pricing environment
- Choose a pricing strategy
- Develop pricing Tactics
What are the 4 pricing objectives?
- Competitive effect objectives: the pricing plan is intended to have a certain effect on the competition's marketing efforts.
- Customer satisfaction objectives: thinking long term
- Image enhancement objectives : use price to make inferences about the quality of the product.
- profit objective: making a lot of profit.
What is an demand curve?
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What causes shifts in demand?
- Trendy new advertising campaign that turns product in a must have
- paparazzi catches celebrity having a product
- Changes in the environment or in company efforts.
- Weather/ occasional use
- introduction of new products (cassette > mp3)
What is opportunity costs?
What is elastic demand?
(If price is increaser, revenues decrease. And vice versa.
Non-Necessities (pizza) generate elastic demand. )
What is inelastic demand?
If price is increased, revenues increase. The demand for necessities (food and electricity) is generally inelastic.
What is cross-elasticity of demand?
Products are subsidies: increase in price of one will increase demand for other (Banana vs strawberry)
One product is essential to use a second (spaghetti and pasta sauce)
What are influences on price elasticity of demand?
- Time period
- (look up slide)
What is break-even analysis?
it is a technique used to examine the relationship between costs and price and to determine what sales volume must be reached at a given price before a company will completely ....
What are Average fixed costs?
How to evaluate the pricing environment ?
- The competition
- Consumer trends.
What is straight mark-up pricing?
What are the advantages and disadvantages of pricing strategies?
advantages:- Simple
- risk free
disadvantages:
- fails to consider: Target market, competition, product life cycle, products image.
- difficult to accurately estimate.
What is based on demand pricing?
- target costing
- Yield management pricing (different prices for different customers, e.g. airlines, hotels)
What is a skimming price?
What is trial pricing?
What are 4 pricing tactics?
- Two part pricing (tennis, golf, mobile)
- Payment pricing (leasing easy payments for new cars.)
- Pricing for multiple products
- Price bundling (monitor, keyboard, cpu in one computer package)
- Captive pricing (razors/blades printers/ink)
- Distribution based pricing
- Discount for channel members
What are 4 discount tactics?
- Quantity discounts (discount when you buy more)
- Cash discounts (pay in 2 weeks and get discounts)
- seasonal discounts (in the wrong season, making things lower priced)
What are reference prices?
What is assimilation effect?
What is price lining?
(pc: standard: 300, more advanced: 350/400)
What is the contribution per unit?
What is a dynamic pricing strategy?
What is bait-and-switch tactic?
What is price fixing?
What is horizontal price fixing?
What is vertical price fixing?
What is a list price (recommended retail price (RRP))?
What are 4 tactics for discounting to the channel of distribution (wholesalers, retailers)
- Quantity discounts
- Cash discounts
- Seasonal discounts
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