What are the 3 major approaches to pricing strategy quizlet?
Marketing process and price settingPrice setting is part of the marketing process and it requires an in-depth market reasearch. The right price can generate more sales while the wrong one can make potential customers look elsewhere. Let’s have a look at the most common pricing strategies. Show
In this short guide we approach the three major and most common pricing strategies:
Cost-based pricing StrategiesCost-based pricing strategies uses production costs as its basis for pricing and, to this base cost, a profit level must be added in order to come up with the product price. Cost-based pricing companies use their costs to find a price floor and a price ceiling. The floor and the ceiling are the minimum and maximum prices for a specific product or service – the price range. The ideal thing to do, would be setting a price in between the floor and the ceiling. Many companies mass-producing goods such as textiles, food and building materials use this pricing technique. Pros:
Cons:
Value-based pricing strategiesValue-based pricing, also known as customer-based pricing, is a pricing concept which is defined as follows: The setting of a product’s price based on the benefits it provides to consumers. In other words, it is about finding the price that your customers are willing to pay. Companies using value-based pricing consider the value of their product and their customers’ perceptions of value as the key to pricing. They determine how much money or value their product will generate for the customer – a value which translates into benefits such as increased efficiency, happiness or stability. By using this type of pricing technique, you may aim at using price to support product image, increase product sales and create product bundles in order to reduce inventory or to attract customers. Pros:
Cons:
Competition-based pricing strategiesCompetition-based pricing, also known as competitive pricing, consists in setting the price of a product based on what the competition is charging. This pricing method is normally used by businesses selling similar products, since services can vary from business to business, while the attributes of a product remain similar. In highly competitive markets, consumers judge products with similar features by the prices. Consequently, competitors may need to price their products lower or risk losing potential sales. keeping an eye on existing and emerging competition by using a competitor website price monitoring software will allow you to be more competitive. The more you know about your rivals and what they are doing, the better you can decide how to manage your prices. It is important for companies to keep their production costs in mind, as well as managing the time they spend monitoring competitors and the prices set by them. With the expansion of eCommerce and Big Data, this last monitoring factor can be seen as a downside if it is not carried out properly. Pros:
Cons:
Recommended textbook solutions
Marketing Essentials: The Deca Connection1st EditionCarl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese 1,600 solutions
Mathematics with Business Applications6th EditionMcGraw-Hill Education 3,760 solutions
Mathematics with Business Applications6th EditionMcGraw-Hill Education 3,760 solutions
Mathematics with Business Applications5th EditionMcGraw-Hill Education 3,755 solutions What are the 3 major approaches to pricing strategy?The 3 Most Common Pricing Strategies. Cost-based or cost-plus pricing.. Market-based pricing.. Value-based pricing.. What are the 3 major types of product pricing models?There are different pricing strategies to choose from but some of the more common ones include: Value-based pricing. Competitive pricing. Price skimming.
What is the approach of pricing strategy?General approaches to pricing are of three types; Cost-Based Pricing Approach (cost-plus pricing, break analysis, and target profit pricing). Buyer-Based Pricing Approach (perceived-value pricing). Competition-Based Pricing Approach (going-rate and sealed bid pricing).
What are the 3 pricing schemes and explain them briefly?What Are The 3 Pricing Strategies? The three pricing strategies are growing, skimming, and following. Grow: Setting a low price, leaving most of the value in the hands of your customers, shutting off margin from your competitors.
|