CHAPTER 19 - Pricing Strategies

PRICING STRATEGIES 1. SKIMMING –involves use of relatively high price compared to competitor prices ie. New drug. 2. PENETRATION PRICING STRATEGIES –uses low price as a major marketing weapon

3. COMPETITIVE PRICING STRATEGIES –firms who price their products at general levels of competitive offerings –negates the price variable

Reductions In Price 1. CASH DISCOUNTS –reductions in price due to prompt payment Ex. 3/10 net TRADE DISCOUNTS –payments to channel members or buyers for performing some marketing function otherwise performed by the manufacturer

3. QUANTITY DISCOUNTS –price reductions offered for large-volume purchases 4. TRADE-INS –Ex. Automobiles, computers 5. REBATES –allowances that offer refunds of a portion of the purchase price by the seller

GEOGRAPHIC CONSIDERATIONS 1. FOB ORIGIN –buyer pays all freight 2. FOB DESTINATION –seller pays all freight

4 Psychological Pricing –certain prices make products more appealing Ex. Odd Pricing 4 Price Flexibility –allow the choice of either: 1) one price policies 2) variable pricing

4 Product Line Pricing –practice of marketing merchandise at a limited number of prices Ex. Airplane seats 4 Promotional Prices –lower-than-normal prices used as a temporary ingredient in a firm's selling strategy

4 LOSS LEADERS seller hopes customers will buy other regularly priced merchandise

4 Transfer Pricing –prices charged for sending goods from 1 company profit center to another