pricing terms

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AM pricing terms

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Pricing Terms

Advanced Marketing - 1st period

is a marketing practice based on the theory that certain prices have a psychological impact. The retail prices are often expressed as odd prices.

Example: When buying ice cream. What would you like, an ice cream at $0.75, $1.25 or $2.00? The choice is yours.

is a product pricing strategyproduct pricing strategy to be used when you have more than one product in a line.

Example: Car washes; a basic wash could be $2, a wash and wax $4 and the whole package for $6. Product line pricing seldom reflects the cost of making the product since it delivers a range of prices that a consumer perceives as being fair incrementally – over the range

A method of determining product costs whereby a business sets a low cost for its most basic product and then profits from selling more costly accessories.

Example. Airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other

setting a price for products that must be used along with a main product.

Example. A razor manufacturer will charge a low price for the first plastic razor and recoup its margin (and more) from the sale of the blades that fit the razor.

When the costs of marketing are kept to a minimum

Ex: A budget airlines gives the consumers a relatively low price to fill seats.

When a company charges a higher price due to the substantial competitive advantage.

Louis Vutton bag of $800

Premium Pricing• Use a high price where there is a unique

brand. This approach is used where a substantial competitive advantage exists and the marketer is safe in the knowledge that they can charge a relatively higher price.

Penetration Pricing• The price charged for products and services is

set artificially low in order to gain market share. Once this is achieved, the price is increased.

• Once there is a large number of subscribers prices gradually increase.

Product bundle pricingProduct bundle pricing

Products that are often sold using the bundle approach once they reach the end of their product life cycle.

Promotional PricingPromotional Pricing

A promotion in when you buy a product and get another product half of its original price or free.

Geographical PricingGeographical Pricing

Geographical pricing is when you adjust the price of a product depending on the consumer’s location.

Value PricingValue Pricing

Value pricing is offering your products at a reasonable price and makes sense to the customer. This can be due to the increase of competition.

Promotional pricing • Promotional price is when the business is

doing a little discount for the consumer. They also may have deals on their product to make people really want to buy then get them to spend money and they make more money.

Promotional pricing examples

• The buy one get one free deal. When you pay for one of the item u get another one free with no charge.

• Put the product price at 50-60% off where you will be paying less for the things you want.

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