Marketing Notes Chapter 14 - M arketing Notes Chapter 14...

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Marketing Notes Chapter 14 Four common approaches to helping find this approximate price level are: 1. Demand oriented 2. Cost-oriented 3. Profit-oriented 4. Competition-oriented Demand-oriented approaches weigh factors underlying expected customer tastes and preferences more heavily than such factors as cost, profit, and competition when selecting a price level. -Skimming pricing is an effective strategy when: 1. Enough prospective customers are willing to buy the product immediately at the high initial price to make these sales profitable 2. the high initial price will not attract competitors 3. lowering price has only a minor effect on increasing the sales volume and reducing the unit costs 4. customers interpret the high price as signifying high quality Penetration pricing: setting a low initial price on a new product to appeal immediately to the mass market -the conditions favoring penetration pricing are the reverse of those supporting skimming pricing: * many segments of the market are price sensitive * a low initial price discourages competitors from entering the market * unit production and marketing costs fall dramatically as production volumes increase
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A firm using penetration pricing may: -maintain the initial price for a time to gain profit lost from its low introductory level or -lower the price further, counting on the new volume to generate the necessary profit Prestige pricing: involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it A marketing manager’s pricing strategy here is to stay above price P0 (the initial price) Price lining: selling not just a single product but a line of products and may price them at a number of different specific pricing points Odd-even pricing: setting prices a few dollars or cents under an even number Target pricing: the manufacturer deliberately adjusting the composition and features of a product to achieve the target price to consumers Bundle pricing: the marketing of two or more products in a single package price Yield management pricing: the charging of different prices to maximize revenue for a set amount of capacity at any given time -service businesses engage in capacity management and an effective way to do this is by varying prices by time, day, week, or season Standard markup pricing:
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Marketing Notes Chapter 14 - M arketing Notes Chapter 14...

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