Cpas review 2013-2014

1. Cpas review2013-2014 MARKETING CHAPTER 26--PRICING

2. Chapter 26 pricing strategies Section 26.1 Basic Pricing Strategies Section 26.2 Pricing Process Strategies

3. Basic Pricing Policies Section 26.1 • markup • one-price policy • flexible-price policy • skimming pricing • penetration pricing

4. Basic Pricing Policies Section 26.1 Notes About the Pricing Policies That Can Affect the Base Price of a Product

5. Basic Pricing Policies Section 26.1 Notes About the Pricing Policies That Can Affect the Base Price of a Product

6. Basic Pricing Policies Section 26.1 Basic Pricing Concepts 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 Price above the competition Resellers calculate prices using the concept of markup Price below the competition Relies on premises of supply-and-demand theory and demand elasticity factors Used by wholesalers and retailers Price in line with the competition markup The difference between an item’s cost and sale price.

7. Basic Pricing Policies Section 26.1 Pricing Policies and Product Life Cycle One-Price Policy Flexible-Price Policy versus one-price policy A policy in which all customers are charged the same prices. flexible-price policy A policy in which customers pay different prices for the same type or amount of merchandise.

8. Basic Pricing Policies Section 26.1 Pricing Policies and Product Life Cycle One-Price Policy Flexible-Price Policy versus one-price policy flexible-price policy

9. Basic Pricing Policies Section 26.1 Pricing Policies and Product Life Cycle Product Life Cycle Price is reduced orproduct is revised. The goal of marketers is to keep products in this stage as long as possible. Maturity Growth Price is reduced. Manufacturing costs are reduced. Product may be discontinued. Decline Introduction Time

10. Basic Pricing Policies Section 26.1 Pricing Policies and Product Life Cycle Product Life Cycle Price is reduced orproduct is revised. The goal of marketers is to keep products in this stage as long as possible. Maturity Growth Price is reduced. Manufacturing costs are reduced. Product may be discontinued. Decline Introduction Time

11. Basic Pricing Policies Section 26.1 Pricing Policies and Product Life Cycle Method 1 Skimming Pricing New Product Introduction Method 2 Penetration Pricing skimming pricing A pricing policy that sets a very high price for a new product. penetration pricing Setting the price for a new product very low to encourage as many as possible to buy the product.

12. Basic Pricing Policies Section 26.1 Pricing Policies and Product Life Cycle Method 1 Skimming Pricing New Product Introduction Method 2 Penetration Pricing skimming pricing penetration pricing

13. Pricing Process Strategies Section 26.2 • product mix pricing strategies • price lining • bundle pricing • geographical pricing • segmented pricing strategy • psychological pricing • prestige pricing • everyday low prices (EDLP) • promotional pricing

14. Pricing Process Strategies Section 26.2 Identify Strategies for Adjusting Prices and Steps in Setting Prices

15. Pricing Process Strategies Section 26.2 Identify Strategies for Adjusting Prices and Steps in Setting Prices

16. Pricing Process Strategies Section 26.2 Adjusting the Base Price Price Lining Product MixPricing Strategies Optional Product Pricing Captive Product Pricing By-Product Pricing Bundle Pricing product mix pricing strategies Adjusting prices to maximize the profitability for a group of products rather than for just one item. price lining A pricing technique that sets a limited number of prices for specific groups or lines of merchandise. bundle pricing Pricing method in which a company offers several complementary, or corresponding, products in a package that is sold at a single price.

17. Pricing Process Strategies Section 26.2 Adjusting the Base Price Product MixPricing Strategies product mix pricing strategies price lining bundle pricing

18. Pricing Process Strategies Section 26.2 Adjusting the Base Price What is geographical pricing? geographical pricing Price adjustments required because of different shipping agreements.

19. Pricing Process Strategies Section 26.2 Adjusting the Base Price What is geographical pricing? geographical pricing

20. Pricing Process Strategies Section 26.2 Adjusting the Base Price With FOB (Free on Board) destination pricing, the seller pays for the shipping and assumes responsibility for the shipment until it reaches the buyer.

21. Pricing Process Strategies Section 26.2 Adjusting the Base Price

22. Pricing Process Strategies Section 26.2 Adjusting the Base Price Four Segmented Pricing Strategy Factors

23. Pricing Process Strategies Section 26.2 Adjusting the Base Price Four Segmented Pricing Strategy Factors

24. Pricing Process Strategies Section 26.2 Adjusting the Base Price Psychological Pricing Strategies psychological pricing Pricing techniques that create an illusion for customers. Odd-Even Pricing prestige pricing Higher-than-average prices to suggest status and high quality to the customer. Prestige Pricing Multiple-Unit Pricing everyday low prices (EDLP) Low prices set on a consistent basis with no intention of raising them or offering discounts in the future. Everyday Low Prices (EDLP)

25. Pricing Process Strategies Section 26.2 Adjusting the Base Price Psychological Pricing Strategies psychological pricing prestige pricing everyday low prices (EDLP)

26. Pricing Process Strategies Section 26.2 Adjusting the Base Price Briefly Describe Each Pricing Strategy

27. Pricing Process Strategies Section 26.2 Adjusting the Base Price Briefly Describe Each Pricing Strategy

28. Pricing Process Strategies Section 26.2 Adjusting the Base Price Promotional Pricing Loss LeaderPricing Rebates andCoupons Special-Event promotional pricing Used in conjunction with sales promotions when prices are reduced for a short period of time.

29. Pricing Process Strategies Section 26.2 Adjusting the Base Price Promotional Pricing promotional pricing

30. Pricing Process Strategies Section 26.2 Adjusting the Base Price Cash Discounts Quantity Discounts Discounts and Allowances Trade Discounts Seasonal Discounts Special Allowances

31. Pricing Process Strategies Section 26.2 Adjusting the Base Price Discounts and Allowances

32. Pricing Process Strategies Section 26.2 The Pricing Process and Related Technology Identify the Purpose of Each of theSix Steps Used to Determine Price

33. Pricing Process Strategies Section 26.2 The Pricing Process and Related Technology Identify the Purpose of Each of theSix Steps Used to Determine Price

34. Pricing Process Strategies Section 26.2 The Pricing Process and Related Technology 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.

35. Pricing Process Strategies Section 26.2 The Pricing Process and Related Technology Pricing Technology .

36. ASSIGNMENT QUIZLET TESTS 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) . • CHAPTER 26-PRICING • 1. All categories • 2. Multiple Choice • (18 words) • (I typed the words and • definitions for you.)