Chapter 12marketing

Chapter 12marketing - Chapter 12: Pricing Travel dot-coms...

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Chapter 12: Pricing Travel dot-coms have beaten out travel agencies because they have benefit customers by: Saving time Saving money Dot-Com Prices The hotels and airlines on these sites get more money than when they are booked through agencies. What is Price ? Price— is the money or other considerations exchanged for the ownership or use of a good or service. Exchanging goods for one another is known as barter Discounts, allowances, and extra fees make the effective price seem lower. Price as an indicator of quality--- price can influence consumer perception of quality or value of a product. As consumers see it, price is often used to indicate value when price is compared with the benefits of the product Value Pricing- is used by marketers by increasing product and service benefits while maintaining or decreasing price “supersizing” at restaurants is an example. Profit Equation of a firm—Profit= total revenue – total cost = (unit price x Quantity sold)- total cost General Approaches to Pricing Demand oriented approaches —emphasize factors underlying expected customer tastes and preferences more than cost, profit and competition 1. Skimming Prices— Setting the highest initial price that customers really desiring the product are willing to pay These customers are not very price sensitive As demand for the first customers is satisfied, the firms slowly lowers the price to attract the next more price-sensitive segment. 2. Penetration Pricing —Setting a low initial price on a new product to appeal immediately to the mass market. 3. Prestige Pricing— Setting a high price to that quality or prestige conscience buyers will be attracted to the product. Price used as a measure of the quality—chanel, rolls royce 4. Odd-Even Pricing— Involves setting price a few dollars or cents under an even number. .99 cent, $699 etc. 699 feels as though its significantly lower than 700 5. Target Pricing— Estimate a price ultimate consumers would pay then work backwards through markups taken by retailer and wholesalers to determine what price to charge. Deliberately adjusting features of product to achieve target price to consumers. 6. Bundle Pricing— The marketing of 2 or more products in a single package price. Usually provides a lower cost to buyers and a lower marketing cost to sellers 7. Yield Management Pricing— Charging of different prices to max revenue for a set amount of capacity at any given time. People paying different prices on airplanes Cost-Oriented Approaches 1. Standard Markup Pricing— Adding a fixed percentage to the cost of all items in a specific product class Used in supermarkets where there are too many products to price individually. High volume products—flour, usually have smaller markups than small volume—snack foods
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This note was uploaded on 03/26/2008 for the course AEM 2400 taught by Professor Mclaughlin,e. during the Spring '07 term at Cornell.

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Chapter 12marketing - Chapter 12: Pricing Travel dot-coms...

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