Fixed and variable costs Competition Company objectives Proposed positioning strategies Target group and willingness to pay Factors that Affect Price
Penetration Pricing Skimming Pricing Competition Pricing Bundle Pricing Premium Pricing Psychological Pricing Optional Pricing Cost Based Pricing Cost Plus Pricing Economy Pricing Captive Product Pricing Promotional Pricing Geographical Pricing Product Line Pricing Pricing Strategies
Price set low to gain market share. Once achieved, price is increased. A TV company may set a low price to gain subscribers, then increase the price after the customer base increases. Penetration Pricing
No frills, low price. Marketing and promotion cost at minimum. Generic Food Brands Economy Pricing
Initial high price to attract customers. Slowly lowers the price. Objective: Skim profits of the market layer by layer. Game Consoles Skimming Pricing
Expects consumer to respond emotionally, rather than rationally. Understand that consumers use price as an indicator of many factors. Selling an item at $99 instead of $100. Psychological Pricing
Range of products or services and the pricing reflects the benefits of parts of the range. Product Line Pricing
Companies offer extras that are optional. The extras will increase the price overall. Car salesmen offer extra features while also increasing the price of the car. Optional Product Pricing
Products are sold with complements. Sold at premium price, because consumers have no choice. Captive Product Pricing
Sellers combine several products into one package. Usually used at the end of a product life cycle. Video Games Product Bundle Pricing
Discounts Money-Off Vouchers Buy One, Get One Promotional Pricing
Notice variations in price in different parts of the world. Rarity value Shipping costs Geographical Pricing
Price set high to reflect the exclusiveness of the product. Premium Pricing
Setting a price in comparison with competitors. Choice to increase or decrease price. Price Matching Guarantees Competition Pricing
Cost Based Pricing Cost of production and distribution taken into account. Decide on a mark-up. Common when businesses are in a volatile industry. Cost Plus Pricing Adds a percentage to costs as profit margin. EX: An item costs $100 to produce an item and the firm adds a 20% profit margin, so the selling price would be $120.
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