question
Cutting price is...
answer
the most expensive marketing tactic there is, It should be considered as a last resort
question
Instead of cutting price...
answer
add value
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To the seller
answer
price is revenue
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To the consumer
answer
price is the cost of something
question
Price allocates
answer
resources in a free-market economy
question
Which of the following choices is NOT one of the reasons cost-plus pricing is so popular?
answer
It is easy to justify to various stakeholders
It simplifies an otherwise complex pricing process
It captures the full price that customers might be willing to pay for a product
It is easy to measure or estimate
Answer: It captures the full price that customers might be willing to pay for a product
It simplifies an otherwise complex pricing process
It captures the full price that customers might be willing to pay for a product
It is easy to measure or estimate
Answer: It captures the full price that customers might be willing to pay for a product
question
All of the following are inputs to any value-pricing analysis EXCEPT:
answer
true economic value
product price
costs of goods sold
perceived value
Answer: product price
product price
costs of goods sold
perceived value
Answer: product price
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A customer's incentive to purchase is equal to
answer
perceived value (PV) minus price
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All of the factors below affect why a company might customize prices EXCEPT
answer
nature of use
competition
intensity of use
consumer tastes
fixed costs
Answer: fixed costs
competition
intensity of use
consumer tastes
fixed costs
Answer: fixed costs
question
Does cutting price always stimulate demand (i.e., increase volume)?
answer
No
question
3 Rules for pricing
answer
1. Price is ultimately what consumers are willing to pay
2. Price is the biggest indicator of quality
3. Always watch your gross margins
2. Price is the biggest indicator of quality
3. Always watch your gross margins
question
Value Orientation
answer
a focus on the economic value created by an organizations product for a given consumer
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Value pricing hinges on two key elements
answer
1. Value Orientation
2. capture a portion of that value for the firm
2. capture a portion of that value for the firm
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Cost-Oriented Pricing
answer
takes the form of cost-plus pricing
question
Cost-Plus pricing
answer
an approach in which an organization applies a predetermined markup to its cost to make or obtain the product
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True Economic Value (TEV)
answer
the value that a fully informed buyer would or should ascribe to the product
question
Perceived Value (PV)
answer
the price that the customer perceives a product to be worth given what they know about the benefits of the product to them, less than the TEV
question
Organizations Cost of Goods Sold (COGS)
answer
Generally represents a lower bound on the price an organization would be willing to set
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