Chapter 11: Pricing Considerations, Approaches, Strategy

1. Reducing prices unnecessarily can lead to lost profits and damaging price wars and signal that the price is more important than customer __________. 2. __________ is the only marketing mix element that produces revenue. 3. __________ is the least understood marketing variable, yet is controllable in an unregulated market. 4. The most common pricing mistakes include: a. pricing that is too __________ oriented b. prices that are not revised to reflect __________ changes c. pricing that does not take the rest of the marketing __________into account d. prices that are not varied enough for different product items and market __________ 5. Many companies want to set a price that will __________ current profits. 6. Some companies want a __________ market-share position, believing the largest market share will eventually enjoy low costs and high long-run profit. 7. Price must be coordinated with __________, __________, and __________ decisions to form a consistent and effective marketing program. 8. A company wants to charge a price that covers costs for __________, __________ & __________ the product. 9. __________ costs (aka overhead) are costs that do not vary with production or sales level. 10. __________ costs vary with the total of units produced. 11. __________ costs are the sum of the fixed and variable costs for any given level of production. 12. While costs set the lower limits of prices, the __________ and __________ set the upper limit. 13. Before setting prices, a marketer must understand the relationship between __________ & __________ for a product. 14. __________, part of effective revenue management, involves training sales & reservations employees to continuously offer a higher-priced product. 15. __________-oriented pricing means the marketer cannot design a marketing program and then set the price. 16. Good pricing begins with analyzing consumer __________ and price __________.

17. Buyers are __________ price-sensitive when the product is unique or high in quality, prestige, or exclusiveness. 18. Consumers are less price-sensitive when __________ products are hard to find. 19. If demand is __________ rather than __________, sellers generally consider lowering their prices. 20. Creating the perception that your offering is __________ from those competitors avoids price competition. 21. Existence of __________ of which buyers are unaware cannot affect their purchase behavior. 22. Customers are more price-sensitive when the price of the product accounts for a large share of the total cost of the end __________. 23. Many purchases have __________ costs. 24. The more someone spends on a product, the more __________ he or she is to the products price. 25. Consumers tend to equate price with __________, especially when they lack prior product experience. 26. When reacting to environmental pressures created by the __________-environment, a company must consider the impact its pricing policies will have on its __________-environment. 27. Companies set prices by selecting a general pricing approach including one or more of these sets of factors: a. the __________-based approach (cost-plus pricing, break-even analysis, and target profit pricing) b. the __________-based approach (perceived value pricing) c. the __________-based approach (going rate) 28. The simplest pricing method is __________-plus pricing, adding a standard markup to the cost of the product. 29. __________-based pricing uses the buyers perceptions of value, not the sellers cost, as the key to pricing. 30. A strategy of ______ -______ pricing is the establishment of price based largely on those of competitors, with less attention paid to costs or demand. 31. When __________ is hard to measure, firms feel that the going price represents the collective wisdom of the industry concerning the price that will yield a fair return.

32. __________ Pricing - hotels or restaurants seeking to position themselves as luxurious and elegant enter the market with a high price to support this position. 33. Market-__________ Pricing - setting a high price when the market is price-insensitive. 34. Market-__________ Pricing - other companies set a low initial price to penetrate the market quickly & deeply, attracting many buyers and winning a large market share. 35. Product-__________ Pricing - sellers combine several products and offer them at a reduced price. 36. __________ pricing refers to segmentation of the market & pricing differences based on price elasticity characteristics of these segments. 37. Companies often adjust basic prices to allow for differences in __________, __________, and __________. 38. The concept behind revenue management is to manage __________ & __________ effectively by pricing differences based on the elasticity of demand for selected customer segments. 39. An effective revenue management system establishes __________ to prohibit customers from one segment receiving prices intended for another. 40. When companies use __________ pricing, they temporarily price their products below list price. 41. __________ demand leads to price increases.