cpas review 2013-2014

CPAS REVIEW2013-2014

MARKETING

CHAPTER 26--PRICING

Section 26.1Basic Pricing Strategies

Chapter 26

pricing strategies

Section 26.2Pricing Process Strategies

• markup

• one-price policy

• flexible-price policy

• skimming pricing

• penetration pricing

Basic Pricing Policies

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6.1


Notes About the Pricing Policies That Can Affect the Base Price of a Product

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6.1


Basic Pricing Concepts

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6.1

Three Strategies Used for Setting Base Prices

Demand-Oriented Pricing

Competition-Oriented Pricing

Cost-Oriented Pricing

Attempt to determine what consumers are willing to pay

Relies on premises of supply-and-demand theory and demand elasticity factors

Price above the competition

Price below the competition

Price in line with the competition

Resellers calculate prices using the concept of markup

Used by wholesalers and retailers

markupThe difference between an item’s cost and sale price.


Pricing Policies and Product Life Cycle

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6.1

versusOne-Price

PolicyFlexible-Price

Policy

one-price policyA policy in which all customers are charged the same prices.

flexible-price policyA policy in which customers pay different prices for the same type or amount of merchandise.



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versusOne-Price

PolicyFlexible-Price

Policy

one-price policy flexible-price policy



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6.1

Product Life Cycle

Introduction

Growth

Maturity

Decline

Time

The goal of marketers is to keep products in this stage as

long as possible.

Price is reduced orproduct is revised.

Price is reduced. Manufacturing costs are reduced. Product may be

discontinued.



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skimming pricingA pricing policy that sets a very high price for a new product.

New Product Introduction

Skimming Pricing

Method 1

Method 2

Penetration Pricing

penetration pricingSetting the price for a new product very low to encourage as many as possible to buy the product.



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6.1

skimming pricing

New Product Introduction

Skimming Pricing

Method 1

Method 2

Penetration Pricing

penetration pricing

• product mix pricing strategies

• price lining

• bundle pricing

• geographical pricing

• segmented pricing strategy

Pricing Process Strategies

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6.2

• psychological pricing

• prestige pricing

• everyday low prices (EDLP)

• promotional pricing


Identify Strategies for Adjusting Prices and Steps in Setting Prices

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6.2

Product MixPricing

Strategies

Price Lining

Optional Product Pricing

Captive Product Pricing

By-Product Pricing

Bundle Pricing


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6.2

Adjusting the Base Price

product mix pricing strategiesAdjusting prices to maximize the profitability for a group of products rather than for just one item.

price liningA pricing technique that sets a limited number of prices for specific groups or lines of merchandise.

bundle pricingPricing method in which a company offers several complementary, or corresponding, products in a package that is sold at a single price.

Product MixPricing

Strategies


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6.2


product mix pricing strategies

price lining

bundle pricing


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6.2


What is geographical pricing?

geographical pricingPrice adjustments required because of different shipping agreements.


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6.2


What is geographical pricing?

geographical pricing


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With FOB (Free on Board) destination pricing, the seller pays

for the shipping and assumes responsibility for the shipment until

it reaches the buyer.


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Considerations for International Pricing

Consumers

Competition

Laws

Regulations

Economic Conditions

Monetary Exchange Rate

Shipping and Tariff Costs

Distribution Systems


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6.2


Four Segmented Pricing Strategy Factors


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6.2


Psychological Pricing Strategies

Odd-Even Pricing

Prestige Pricing

Multiple-Unit Pricing

Everyday Low Prices (EDLP)

psychological pricingPricing techniques that create an illusion for customers.

prestige pricingHigher-than-average prices to suggest status and high quality to the customer.

everyday low prices (EDLP)Low prices set on a consistent basis with no intention of raising them or offering discounts in the future.


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Psychological Pricing Strategies

psychological pricing

prestige pricing

everyday low prices (EDLP)


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6.2


Briefly Describe Each Pricing Strategy


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Promotional Pricing

Loss LeaderPricing

Special-EventRebates and

Coupons

promotional pricingUsed in conjunction with sales promotions when prices are reduced for a short period of time.


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6.2


Promotional Pricing

promotional pricing


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Discounts andAllowances

Cash Discounts

Quantity Discounts

Trade Discounts

Seasonal Discounts

Special Allowances


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6.2


Discounts andAllowances


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6.2

The Pricing Process and Related Technology

Identify the Purpose of Each of theSix Steps Used to Determine Price


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Pricing Technology

SmartPricing

CommunicatingPrices to Customers

RFIDTechnology

Decisions are based on large amounts of data.

Electronic gadgets and kiosks provide consumers with real-time information.

Radio frequency identification (RFID) transmits information wirelessly.


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6.2


Pricing Technology

.

ASSIGNMENT

QUIZLET TESTS

CHAPTER 26-PRICING

1. All categories

2. Multiple Choice

(18 words)

(I typed the words and

definitions for you.)

VISUAL LEARNING

1. Copy and paste the words and definitions into

a Word document.

2. Find a picture on “google images” that relates to that word and definition.

3. Try to make three columns if at all possible.

4. All eighteen (18) .

cpas review 2013-2014

Documents

product life cyclesection

pricing strategiessection

basic pricing policiesnotes

high price

sale price

flexibleprice policya

different prices

setting pricessection