For a skimming pricing strategy to be successful competitors cannot be able to

For a skimming pricing strategy to be successful

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For a skimming pricing strategy to be successful, competitors cannot be able to enter the market easily; otherwise, price competition will likely force lower prices and undermine the whole strategy. Market Penetration Pricing: Market penetration pricing: A pricing strategy of setting the initial price low for the introduction of the new product or service, with the objective of building sales, market share, and profits quickly. Experience Curve Effect: Refers to the drop in unit cost as the accumulated volume sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in the price. Psychological Factors Affecting Value-Based Pricing Strategies Reference Price: The price against which buyers compare the actual selling price of the product and that facilitates their evaluation process. Odd prices: Prices that in odd numbers, usually 9, such as $3.99 Everyday Low Pricing (EDLP): A strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer. High/low pricing: A pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases. Pricing Tactics Pricing Tactics: Short-term methods, in contrast to long-term pricing strategies, used to focus on company objectives, customers, costs, competition, or channel members; can be responses to competitive threats or broadly accepted methods of calculating a final price for the customer that is short term in nature. Pricing Tactics Aimed at Consumers: Price Lining: Consumer market pricing tactic of establishing a price floor and a price ceiling for an entire line of similar products and then setting a few other price points in between to represent distinct difference in quality. Price Bundling: Consumer pricing tactic of selling more than one product for a single, lower price than the items would cost sold separately; can be used to sell slow-moving items, to encourage customers to stock up so they won’t purchase competing brands, to encourage trial of a new product, or to provide an incentive to purchase a less desirable product or service to obtain a more desirable one in the same bundle. Leader Pricing: Consumer pricing tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store’s cost. Consumer Price Reduction:
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Markdowns: Reductions retailers take on the initial selling price of the product or service. Size Discount: The most common implementation of a quantity discount at the consumer level; the larger the quantity bought, the less the cost per unit.
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  • Fall '12
  • DavidRose
  • Marketing, Customers

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