Chapter 13.class.notes - updated

Chapter 13.class.notes - updated - Class Notes for Chapter...

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Class Notes for Chapter 13 Pricing: Nature and Role “Price only becomes an issue in the absence of value” (Create value to lessen the importance of Price) Today’s Learning Objective: Looking at and learning about price and pricing from every reasonable possible angle. Specific issues & answers to be discussed in today’s class… 1) What is price? (Simplest definition; Consumers definition) 2) Why is price and “pricing” so important? 3) What are the most frequently arising pricing problems? 4) What are the primary issues and considerations on which pricing decisions should be based and prices themselves set? 5) What is (define) value-based pricing? a. When should a firm use value-based pricing? b. What is an example of firm that uses value-based pricing? 2) What is (define) cost-based pricing? a. When should a firm use cost-based pricing? 3) Define and discuss psychological pricing? a. Provide several examples of what you would be consider to be psychological pricing 4) What it comes to pricing, what ought to be the real goal of most companies? By class session’s end, you should be able to: Answer each of these questions and Understand each of the aforementioned issues. Remember: We are discussing one of the 4 Marketing Mix “P’s” here. We have completed product We are doing price We will do promotion and place. o In a general sense, if firms do NPD well, pricing becomes less important to customers. Thus firms can price more highly. In this instance, pricing more highly makes a great deal of sense because it is more difficult to raise low prices (and sustain demand) than to lower higher prices (and raise demand) 1
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Pricing Points to Ponder: Never use the word ‘cheap’ to describe your pricing or products. Never! About 2/3 of prices end with a 9, based on the assumption that consumers round nine, making the product same less expensive. Most pricing decisions (by marketers) are arbitrary, based on gut. Few consumers know the right price for anything. o Instead, consumers mainly respond to increases or decreases, and the comparative prices of one product/brand versus another product/brand; unless, of course, the one brand has carved out more equity than the other. Marketers habitually try to trick consumers into thinking they are getting more for less. Skippy’s, for instance, recently indented its jar such that the same priced container now delivers 9% less PB. But most consumers did not recognize this, happily continuing to buy Skippy’s at the seemingly same price. ‘Anchors’ are another pricing trick that marketers sometimes use. Specifically, few consumers at the NYC restaurant Norma’s buy the $1,000 caviar and lobster omelet, but the fact that this product costs $1,000 makes the other menu items, which surely are extremely expensive, seem less pricy. Consumer tend to over-value, and thus tend to be willing to pay more, for
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This note was uploaded on 03/12/2011 for the course MKTG 3650 taught by Professor Thompson during the Spring '08 term at North Texas.

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Chapter 13.class.notes - updated - Class Notes for Chapter...

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