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level: Chapter 9: Understanding and Capturing Customer value

Questions and Answers List

level questions: Chapter 9: Understanding and Capturing Customer value

QuestionAnswer
What is the only element of the marketing mix that produces revenue?Price
What are the 3 major pricing strategies?Customer- value, cost-based, and competition- based pricing.
What is Value-added Pricing?Attaching value-added features and services to defferetiate and charging higher prices.
What is dynamic pricing and which company use it?Adjusting prices continually to meet the needs of individual customers. Amazon.
What is Cost -based Pricing?Setting prices based on the cost of producing, distributing and selling the product plus a fair rate of return.
What are the Types of Cost with Cost-based Pricing?Fixed cost (overhead), variable cost, and total cost.
What is Good Value Pricing?Offering just the right combination of quality and good service at a fair price.
What is Value-added Pricing?Attaching value-added features and services to differentiate and charging higher prices.
What is Competition-based Pricing?Setting prices based on competitors strategies, prices, cost, and market offerings.
What is the Demand Curve?A curve that shows the number of units the market will buy in a given time period.
What is Target Pricing?Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.
What is Price Elasticity?A measure of the sensitivity of demand to changes in price.
What is Inelastic demand?Demand hardly changes with a small change in price.
What is Elastic demand?Demand changes greatly with a small change in price.
What are the 2 broad strategies companies face when setting the price for the first time?Market-skimming & Market-penetration pricing.
What is Market-skimming pricing?Setting a high price to skim maximun revenues from the segments willing to pay the high price.
What is Market-penetration pricing?Setting a low price to attract a large number of buyers and a large market share.
When does Market-penetration pricing works?Market must be price sensitive, and production and distribution cost must decrease as sales volume increase.
When does a Market-skimming pricing works?Works when the quality and image of the product support higher price.
What are the 5 product mix pricing situations?Product-line, optional-product, captive-product, by-product & product-bundle.
What is Product Line Pricing and give an example?Setting price steps between various products in a product line. An example would be cars.
What is Optional-Product pricing and give an example?The pricing of optional products along with a main products. An example would be options for a car.
What is Captive-product pricing and give an example?Setting a price for products that must be used along with the main product. An example would be Gilette + blades.
What is a By-product pricing?Setting a price for by-products to help offset the cost of disposing of them and help the main product's price more competitive.
What is Product bundle pricing?Combining several products and offering the bundle at a reduced price.
What are 3 price adjustment strategies?1. Discount and allowance pricing. 2. Segmented pricing. 3. Dynamic pricing.
What is segmented pricing and give an example?Selling a product or service at two or more prices, where the difference in prices is not based on differences in cost. An example would be airline seats or student deals