9 17 product mix pricing strategies optionalproduct

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Unformatted text preview: tration Setting a Low Price for a New Product in Order to “Penetrate” the Market Quickly and Deeply. Attract a Large Number of Buyers and Win a Larger Market Share. 9-16 Product Mix-Pricing Strategies: Product Line Pricing • Involves setting price steps between various products in a product line based on: – Cost differences between products, – Customer evaluations of different features, and – Competitors’ prices. 9-17 Product Mix-Pricing Strategies • Optional­Product – Pricing optional or accessory products sold with the main product. For example: added memory on a computer • Captive­Product – Pricing products that must be used with the main product. For example: ink and printers 9-18 Product Mix-Pricing Strategies • By­Product – Pricing low­ value by­ products to get rid of them and make the main product’s price more competitive. Example: sawdust • Product­ Bundling – Combining several products and offering the bundle at a reduced price. Example: theater season tickets 9-19 Discount and Allowance Pricing A d ju s tin g B a s ic P r ic e to R e w a r d C u s to m e r s F o r C e r ta in R e s p o n s e s C a s h D is c o u n t S e a s o n a l D is c o u n t Q u a n tity D is c o u n t T r a d e -In A llo w a n c e P r o m o tio n a l A llo w a n c e 9-20 Psychological Pricing • Considers the psychology of • Reta il $1 00.0 Cos 0 t $ 3.00 • prices and not simply the economics. Customers use price less when they can judge quality of a product. Price becomes an important quality signal when customers can’t judge quality; price is used to say something about a product. 9-21 Initiating Price Changes Why? Excess Capacity Falling Market Share Dominate Market Through Lower Costs Why? Cost Inflation Overdemand: Company Can’t Supply All Customers’ Needs 9-22 Assessing and Responding to Competitor Price Changes 9-23...
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