CHAPTER 19 - Pricing Strategies

PRICING STRATEGIES

1. SKIMMING – involves use of relatively high price compared

to competitor prices• ie. New drug.

2. PENETRATION PRICING STRATEGIES– uses low price as a major marketing weapon

3. COMPETITIVE PRICING STRATEGIES– firms who price their products at general levels

of competitive offerings– negates the price variable

Reductions In Price

1. CASH DISCOUNTS– reductions in price due to prompt payment

Ex. 3/10 net 60

2. TRADE DISCOUNTS– payments to channel members or buyers for

performing some marketing function otherwise performed by the manufacturer

3. QUANTITY DISCOUNTS– price reductions offered for large-volume purchases

4. TRADE-INS– Ex. Automobiles, computers

5. REBATES– allowances that offer refunds of a portion of the

purchase price by the seller

GEOGRAPHIC CONSIDERATIONS1. FOB ORIGIN

– buyer pays all freight

2. FOB DESTINATION– seller pays all freight

Psychological Pricing– certain prices make products more appealing

Ex. Odd Pricing

Price Flexibility– allow the choice of either:

1) one price policies

2) variable pricing

Product Line Pricing– practice of marketing merchandise at a limited

number of prices

Ex. Airplane seats

Promotional Prices– lower-than-normal prices used as a temporary

ingredient in a firm's selling strategy

LOSS LEADERS• seller hopes customers will buy other regularly

priced merchandise

Transfer Pricing– prices charged for sending goods from 1

company profit center to another