Pricing Strategies Flashcards

Flashcards for BUS129 Introductory Marketing - Week 11: Pricing Strategies

Price

The overall sacrifice a consumer is willing to make to acquire a specific product.

Price-Quality Relationship

The concept that consumers, especially inexperienced ones, often use price as an indicator of quality.

5 Cs of Pricing

Company Objectives, Customers, Costs, Competition, and Channel Members.

Profit-Oriented Pricing

A pricing strategy focused on achieving a target profit margin for all products.

Sales-Oriented Pricing

A pricing strategy focused on maximizing sales volume, even if it means lower profits.

Competitor-Oriented Pricing

A pricing strategy focused on matching or undercutting competitor prices.

Customer-Oriented Pricing

A pricing strategy focused on setting prices based on the perceived value to the customer (premium pricing).

Price Elasticity

Measures the extent to which changes in price affect demand.

Elastic Products

Products that are price-sensitive; demand changes significantly with price changes.

Inelastic Products

Products that are price-insensitive; demand does not change significantly with price changes.

Variable Costs

Costs that vary directly with the level of production.

Fixed Costs

Costs that remain constant regardless of production volume

Break-Even Analysis

Determines the point at which revenue equals total costs.

Monopoly

A market structure where one firm controls the entire market.

Oligopoly

A market structure where a few firms dominate the market.

Monopolistic Competition

A market structure with many firms selling differentiated products at different prices.

Pure Competition

A market structure with many firms selling goods for the same price.

Grey Market

Employs irregular channels of distribution.

Value-Based Pricing

Pricing based on the overall value of the product offering as perceived by the consumer.

Cost-Based Pricing

Determines the final price by starting with the costs and adding a profit margin.

Competitor-Based Pricing

Setting prices according to their competitors.

Markdowns

Reductions on the initial selling price.

Quantity Discounts

The larger the quantity purchased, the less the cost per unit.

Seasonal Discounts

Used to stimulate demand during off-peak seasons.

Coupons

Inducement to try products for the first time.

Rebates

Manufacturer offers a refund as part of the purchase price returned as cash.

Leasing

Pay a fee to use the product for a specific period of time, without owning it.

Price Bundling

Selling more than one product for a single, lower price.

Leader Pricing

Aggressively pricing and advertising a regularly purchased item to build store traffic.

Price Lining

Establishing a price floor and a price ceiling for an entire line of similar products.

Price Skimming

Used for products perceived pioneering and of high quality to control demand and recoup investment.

Market Penetration

Builds sales and market share quickly to discourage other firms from entering the market.