Ch. 14 mkt review - MKT 3343 Chapter 14 Arriving at the...

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1 MKT 3343 Chapter 14 – Arriving at the Final Price NOTE: The six pricing process steps were introduced in Chapter 13 and Steps 1, 2, and 3 of these six steps were emphasized in Chapter 13. Steps 4, 5, and 6 of the pricing process will be addressed in Chapter 14. What are steps 4, 5, and 6 of the pricing process?** 4.) Select and approximate price level. 5.) Set list or quoted price 6.) Make special adjustments to list or quoted price. Pg.362 What is meant by setting an approximate price level? What are the four common approaches to helping find an approximate price level? * 1) demand-oriented, 2) cost- oriented, 3) profit-oriented, 4) competition-oriented. Pg. 362 Explain the differences in setting a price using each of the following four common approaches to pricing: Demand-Oriented approach : weighs factors underlying expected customer tastes and preferences more heavily. Cost-Oriented approach : Standard markup, Cost-plus, Experience curve Profit-Oriented approach : Target profit, Target return on sales, Target return on investment. Competition-Oriented approach : Customary, Above-at-or below market, loss leader. Pg.363 What is meant by price skimming? * setting the highest initial price that customers really diesiring the product are willing to pay. Take a hypothetical product and estimate what it might cost the retailer to buy it from a wholesaler. Now, given that cost of goods, set a price using the price skimming strategy. What is meant by price penetration? * setting a low initial price on a new product to appeal immediately to the mass market, “the exact opposite of price skimming”. Take a hypothetical product and estimate what it might cost the retailer to buy it from a wholesaler. Now, given that cost of goods, set a price using the price penetration strategy. What is meant by prestige pricing? * Involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it. Take a hypothetical product and estimate what it might cost the retailer to buy it from a wholesaler. Now, given that cost of goods, set a price using the prestige price strategy. What is meant by price lining? * Often a firm that is selling not just a single product but a line of products may price them at a number of different specific pricing points. Take a hypothetical product and as a hypothetical retailer purchase five of the same type of product (they may be different colors or slightly different in design but they would all be shirts or slacks or skirts, etc.) from a wholesaler at different prices (e.g. one set of shirts at $15.00 from one manufacture and another set of shirts at $17.00 from another manufacturer, etc.).
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