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prices?
How should a company set prices initially
for products or services?
How should a company adapt prices to
meet varying circumstances and
opportunities?
When should a company initiate a price
change?
How should a company respond to a
competitors price challenge?
Special assessment
Bribe
Fee
Dues
Fare
Salary
Rate
Commission
Toll
Wage
Premium
Tax
Rent
Honorarium
industry margins
Failure to revise price to capitalize on
market changes
Setting price independently of the rest of
the marketing mix
Failure to vary price by product item,
market segment, distribution channels,
and purchase occasion
Reference Prices
Price-quality inferences
Price endings
Lower-bound price
Competitor prices
Expected future
price
Usual discounted
price
Price Cues
Left to right pricing ($299 vs. $300)
Odd number discount perceptions
Even number value perceptions
Ending prices with 0 or 5
Sale written next to price
purchase item
infrequently
Customers are new
Product designs
vary over time
Prices vary
seasonally
Quality or sizes
vary across stores
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
14-9
current profit
Maximum
market share
Maximum
market
skimming
Product-quality
leadership
14-11
Step 2: Determining
Demand
Price Sensitivity
Estimating
Demand Curves
Price Elasticity
of Demand
14-12
Price sensitivity
Reactions of the customer to the increase or decrease in
prices
The customers are less price sensitive1. There are few or n substitutes or competitors
2. They do not readily notice the higher price
3. They are slow to change their buying habits
4. Hey think the higher price are justified
5. Price is only a small part of the total cost of obtaining,
operating and servicing the product
income
The expenditure is small compared to the total cost of
the end product
Part of the cost is paid by another party
The product is used with previously purchased assets
The product is assumed to have high quality and
prestige
Buyers cannot store the product
14
different levels
of production
14-18
pricing
Perceived-value
pricing
Value pricing
Going-rate pricing
Auction-type pricing
14-21
Auction-Type Pricing
English auctions
Dutch auctions
Sealed-bid auctions
marketing activities
Company pricing
policies
Gain-and-risk
sharing pricing
Impact of price on
other parties
14-24
Geographical Pricing
Discounts/Allowances
Promotional Pricing
Differentiated Pricing
Price-Adaptation
Discounts/
Strategies
Countertrade
Allowances
Barter
Compensation deal
Buyback
arrangement
Offset
Cash discount
Quantity discount
Functional discount
Seasonal discount
Allowance
Promotional Pricing
Tactics
Loss-leader pricing
Special-event pricing
Cash rebates
Low-interest
financing
Longer payment
terms
Warranties and
service contracts
Psychological
discounting
14-28
Differentiated Pricing
Customer-segment
pricing
Product-form
pricing
Image pricing
Channel pricing
Location pricing
Time pricing
Yield pricing
Predatory pricing
14-29
ingredients
Reducing or removing product features
Reducing or removing product services
Using less expensive packaging materials or
larger package sizes
Reducing the number of sizes and models
offered
Creating new economy brands.