CH 14 - 6 Steps in Setting Price o Demand Cost Skimming A...

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6 Steps in Setting Price o Demand Skimming - A marketer sets a relatively high price for a product/service at first, then lowers the price over time. It allows the firm to recover its sunk costs before competition steps in and lowers the market price Penetration - A relatively low initial entry price, a price that is often lower than the eventual market price. The expectation is that the initial low price will secure market acceptance by breaking down existing brand loyalties Prestige - Set at a high level, recognizing that lower prices will inhibit sales rather than encourage them and that buyers will associate a high price for the product with superior quality Price Lining - Using a number of different specific price points for your line of products OddEven -Setting prices a few dollars/cents under an even number Target - A manufacturer will adjust the composition of a product to achieve a target price to consumers Bundle - Marketing of two or more products in a single package price Yield Management - Charging of different prices to maximize revenue for a set amount of capacity at any given time o Cost Standard Markup - Adding a fixed % to the cost of all items in a specific product class CostPlus - Summing the total unit cost of providing a product/service and adding a specific amount Cost-plus percentage-of-cost pricing Cost-plus fixed-fee pricing Experience Curve - As individuals and/or organizations get more experienced at a task, they usually become more efficient at it and can charge lower prices at higher efficiencies o Profit D o Competition o o 2 Common Price Policy Options for Setting a List or Quoted Price One-price policy (
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This note was uploaded on 05/17/2010 for the course MKT 337 taught by Professor Mcallister during the Spring '07 term at University of Texas.

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CH 14 - 6 Steps in Setting Price o Demand Cost Skimming A...

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