Final exam - Final Exam Taryn Lopez Marketing Strategy,...

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Final Exam Taryn Lopez Marketing Strategy, BUSI 544 December 2, 2009
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Final Exam 2 3) The first product-mix pricing strategy is product-line pricing. Companies can introduce different lines of the same product that have different quality. They do this to appeal to a variety of customers who will be looking to buy the product, but not will to pay the same price. For example a clothing store may offer dresses at two price levels: $50 and $100. Customers who pay $100 perceive they are receiving a better quality dress that the $50 dresses. The second product-mix pricing strategy is optional-feature pricing. During this strategy a company will offer optional features, products and services in addition to their main product. This strategy is used for car buying. Consumers have the option to buy a basic car or they can get the car fully- loaded if they want extra amenities. The third product-mix pricing strategy is captive-product pricing. Companies offer low prices for the initial product purchased from them, but the replacement and other necessary parts to use the product sell for much higher. For example a printer company may sell their printers for very low prices, but charge twice as much to buy toner and ink from them. The fourth product-mix pricing strategy is two-part pricing. Two-part pricing occurs when a company has a fixed fee and adds a variable usage fee. The fixed fee is relatively low to entice customers to join their service. The variable fees are set high to account for the low entry fee. For example, a telephone company may offer a fixed fee for their monthly service but add a variable fee for calling outside the area. The fifth product-mix pricing strategy is by-product pricing. There are certain types of goods that will have by-products left over after making the main products. For example, meat companies have unused parts that some customers may consider valuable. If companies can sell the by-products at a higher cost they may be able to reduce the cost of their main products below the competition. The final product-mix pricing strategy is product-bundling pricing. Companies can offer pure bundling, which is the firm only offers it products in a bundle. Companies can also offer mixed bundling. Mixed bundling occurs when the firms offers the products separately and as part of a bundle. A person buying season football tickets will pay less per-game than a person who pays for the tickets individually. Companies who bundle need to make sure they do not promote on the products individually as cheaply as the bundle. They also need to make sure they do not limit the promotion of the bundle to a one item because customers may feel like they are paying for items they do not want. Finally, companies who bundle want to make sure they limit larges rebates on individual items or
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This note was uploaded on 11/22/2010 for the course BUSI 544 taught by Professor Harper during the Fall '09 term at Columbia College.

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Final exam - Final Exam Taryn Lopez Marketing Strategy,...

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