Above, at, or below market Marketing managers often have a subjective feel for the competitor’s markup price. Ex) Premium products are above market price o Loss Leader Sell below its usual price to attract customers, hoping they will buy other products # 14) What is the difference between price skimming and penetration pricing, and when is each appropriate? Which stage of the PLC are these associated with? Price Penetration Differences – when to use? vs. Price Skimming 1. Many segments of the market are price sensitive 2. A low initial price discourages competitors from entering the market 3. Unit production and marketing costs fall dramatically as production volumes increase
MKT – 3013 EXAM #3 Price penetration – when same as price skimming? What stage of PLC? #15) What is the difference between one-price and flexible-price policies? #16) Three special adjustments to list or quoted price – the various types of them?
MKT – 3013 EXAM #3 o Cash Ex) Pay by within 10 days get 10% off Allowances o Promotional Allowances Sellers in the marketing channel can qualify for promotional allowances by undertaking certain advertising or selling activities promoting a product. Various types such as an actual cash payment, or an extra amount of “free goods” - frequently some of these savings passed to consumer. Some companies use everyday low pricing (EDLP) EDLP is the practice of replacing promotional allowances with lower manufacturing prices – reduce avg. price for consumer o Trade-In Allowances A Price reduction given when a product is accepted as part of a payment for a new product. Geographical o FOB origin pricing - “Free on board” Seller pays cost of loading the product onto vehicle for transportation. Once loaded, title of goods passes to buyers and they are responsible for the rest of the costs
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