Marketing Pricing Strategies and Concepts

A series of flashcards covering key marketing concepts related to pricing strategies, brand management, and product development.

What is the relationship between price and value in marketing?

Price is the amount of money a customer must pay for a product or service, while value is the perceived benefit or worth received from it.

What are the 5 C’s of pricing?

1. Company objectives, 2. Customers, 3. Costs, 4. Competition, 5. Channel members.

What is profit orientation in pricing?

Profit orientation focuses on setting prices to maximize profits, often aiming for a specific return on investment (ROI).

What is sales orientation in pricing?

Sales orientation focuses on increasing sales volume, sometimes by setting lower prices to attract more customers.

What is competitor orientation in pricing?

Competitor orientation focuses on pricing strategies based on competitors' pricing, including competitive parity, status quo, monopoly, oligopolistic competition, monopolistic competition, and pure competition.

What is customer orientation in pricing?

Customer orientation focuses on pricing based on customer perceptions of value and willingness to pay.

What is the demand curve?

The demand curve shows the relationship between the price of a product and the quantity demanded by consumers.

What is price elasticity of demand?

Price elasticity of demand measures how sensitive the quantity demanded is to a change in price.

How do you calculate price elasticity of demand?

Price Elasticity of Demand (PED) = % change in quantity demanded / % change in price.

What is the income effect in pricing?

The income effect describes how changes in a consumer's income affect their purchasing decisions.

What are substitutes and complements in pricing?

Substitutes are products that can replace each other; complements are products consumed together.

What is dynamic pricing?

Dynamic pricing refers to adjusting prices based on real-time market conditions.

What are fixed and variable costs?

Fixed costs are constant regardless of production volume; variable costs change with production levels.

What is the break-even point?

The break-even point is where total revenue equals total costs.

How do you calculate markup?

Markup = (Selling Price - Cost Price) / Cost Price × 100.

What is core customer value?

Core customer value is the fundamental benefit or need a customer seeks when purchasing a product.

What is an SKU, product line, and product mix?

SKU is a unique identifier for products; a product line is a group of related products; a product mix is the total range of products offered by a company.

What are the types of products?

1. Convenience products, 2. Shopping products, 3. Specialty products, 4. Unsought products.

What are the 6 key components that make a brand?

1. Brand name, 2. Logo, 3. Brand symbols, 4. Slogans, 5. Brand voice, 6. Brand identity.

What are the categories of brand ownership?

1. Manufacturers' (National) Brands, 2. Private Labels/Store Brands, 3. Licensed Brands.

What is the value of branding for both the firm and customer?

For the firm: Increased loyalty, higher quality perception, premium pricing, competitive advantage, easier expansion. For the customer: Simplified decisions, reduced risk, status, emotional connection, trust.

What is brand equity and its 4 aspects?

Brand equity is the value a brand adds to a product: 1. Brand awareness, 2. Brand associations, 3. Perceived quality, 4. Brand loyalty.

What is the difference between a family brand and an individual brand strategy?

A family brand uses one name for a range of products; an individual brand uses different names for different products.

What are brand naming strategies?

1. Descriptive, 2. Evocative, 3. Acronyms, 4. Founder names.

What is brand extension and line extension?

Brand extension uses an existing brand name for a new product category; line extension adds new products to an existing line.

What is brand dilution?

Brand dilution occurs when a brand extends too far from its core values, weakening its image.

What is brand licensing?

Brand licensing allows another company to use a brand’s name or logo for royalties.

What is co-branding?

Co-branding involves two or more brands collaborating to create a product.

What is repositioning?

Repositioning changes a brand’s image or target market in response to market conditions.

What are the roles of packaging and labeling in marketing?

Packaging protects the product and facilitates marketing; labeling provides information and branding.

What are the benefits of new products?

1. Increased revenue, 2. Diversification, 3. Competitive advantage, 4. Brand differentiation, 5. Market expansion.

What is innovation and what are pioneers in the market?

Innovation is the introduction of new products; pioneers are the first movers in a market.

What are the 5 types of new products?

1. New-to-the-world, 2. New product lines, 3. Product line extensions, 4. Improvements, 5. Repositioned products.

What is diffusion of innovation, and the groups within it?

Diffusion of innovation is how new products are adopted by consumer groups: 1. Innovators, 2. Early Adopters, 3. Early Majority, 4. Late Majority, 5. Laggards.

What are opinion leaders and which category do they fall into?

Opinion leaders are individuals influencing others' decisions, typically in the Early Adopters group.

What are the 5 factors influencing the rate of adoption?

1. Relative advantage, 2. Compatibility, 3. Complexity, 4. Trialability, 5. Observability.

What are the steps in the new product development process?

1. Idea generation, 2. Idea screening, 3. Concept testing, 4. Business analysis, 5. Product development, 6. Market testing, 7. Commercialization.

What is concept testing?

Concept testing presents potential product ideas to target consumers for feedback.

What is product development?

Product development creates prototypes and undergoes testing to refine the product.

What is market testing?

Market testing evaluates consumer response to a product in a limited market.

What is the product life cycle (PLC) and its stages?

PLC describes stages from introduction to decline: 1. Introduction, 2. Growth, 3. Maturity, 4. Decline.

What is the service-product continuum?

The service-product continuum illustrates the range from pure goods to pure services.

What are the differences between services and goods?

1. Intangibility, 2. Inseparability, 3. Variability, 4. Perishability.

What is gray market pricing?

Gray market refers to products sold outside authorized channels, often at lower prices.

What is the difference between EDLP and high-low pricing strategy?

EDLP offers consistent low prices; high-low pricing features fluctuating prices.

What is price skimming and penetration pricing?

Price skimming charges high initially and lowers over time; penetration pricing sets low prices to gain market share.

What is loss leader pricing?

Loss leader pricing sells a product at a loss to attract customers.

What is price discrimination?

Price discrimination involves charging different prices based on consumer characteristics.

What are coupons and seasonal discounts?

Coupons provide discounts; seasonal discounts are based on the time of year.

What is penetration pricing?

Penetration pricing is a strategy where a company sets a low initial price to attract customers and gain market share quickly. Over time, the price may be increased once the product has gained customer loyalty and market penetration.

Q: What is leader pricing and loss leader pricing?

• Leader pricing: Setting the price of a product lower than normal to draw customers in, with the hope that they will buy other full-priced items.

• Loss leader pricing: A strategy where a product is sold at a loss to attract customers in the hopes they will make additional purchases of more profitable items.

Q: What is bait and switch marketing?

Bait and switch is an unethical or illegal marketing tactic where a company advertises a product at a very low price (the "bait") to attract customers, but when they arrive, they are told the product is unavailable and are encouraged to buy a more expensive item (the "switch").

Q: What is predatory pricing?

Predatory pricing is when a company sets its prices extremely low, often below cost, to drive competitors out of the market. Once competition is eliminated, the company may raise its prices to recoup losses. This practice is illegal in many jurisdictions.

Q: What is a cash discount?

A cash discount is a reduction in the price offered to customers who pay their invoice promptly or in cash rather than through credit. This strategy incentivizes quicker payments and improves cash flow for businesses.

Q: What is the cost of ownership method?

The cost of ownership method is a pricing strategy where the price of a product is based not only on its purchase price but also on the total cost of owning and using the product over its lifespan. This includes maintenance, repairs, and other long-term expenses.

Q: What is bundling?

A: Bundling is a pricing strategy where multiple products or services are sold together at a lower price than if bought separately. It encourages customers to buy more products and can increase overall sales.Bundling allows businesses to offer a perceived value, enhancing the customer experience while promoting complementary products.