Chapter 9 - Pricing

Question 1

What is a price ceiling?

Answer 1

The customer’s perception of value

Question 2

What is a price floor?

Answer 2

The minimum price needed to break even

Question 3

What are the 6 kinds of demand-oriented pricing?

Answer 3

1. Skimming pricing - high to low
2. Penetration pricing - low to high
3. Prestige pricing - high
4. Price lining - different products at various price points
5. Target pricing - pricing as best as possible for target market
6. Bundle pricing - pricing two or more things together as one

Question 4

What is demand-oriented pricing?

Answer 4

Pricing based on behaviour

Question 5

What is cost-orientated pricing?

Answer 5

Using total costs to determine your price

Question 6

What are 2 cost-orientated pricing strategy?

Answer 6

1. Markups
2. Cost-plus pricing

Question 7

What is profit-oriented pricing?

Answer 7

Attempts to balance both revenues and costs to set a price

Question 8

What is competition-oriented pricing?

Answer 8

Looking at what your competition is doing when setting prices.

Question 9

What are 4 internal factors to consider when pricing products?

Answer 9

1. Corporate strategy and objective
2. Other marketing mix elements
3. Desired positon
4. Brand

Question 10

What are 5 external factors to consider when pricing products?

Answer 10

1. Market and demand
2. Price elasticity
3. Economic conditions
4. Regulations
5. Social awareness and concerns

Question 11

What is Value-based pricing (price lining)?

Answer 11

1. Good-value pricing - Just the right combination of quality and good service at fair price (ELOW)
2. Value-added pricing - add features and value to differentiate and thus charge higher price

Question 12

What is typically seen within a demand curve?

Answer 12

As prices increase, quantity demanded will decrease. As prices decrease, quantity demanded will increase

Question 13

What is elastic demand? Inelastic?

Answer 13

Elastic - slight change in price leads to large change in demand
Inelastic - slight change in price leads to small change in demand

Question 14

What are pricing objectives?

Answer 14

Reflects corporate goals

Question 15

What are pricing constraints?

Answer 15

Relates to conditions that exist in the marketplace, narrowing the range of choices.