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Chapter 11: Pricing – Considerations, Approaches, Strategy

1. Reducing prices unnecessarily can lead to lost profits and damaging price wars and signal that the price is more important than customer __________. 2. __________ is the only marketing mix element that produces revenue. 3. __________ is the least understood marketing variable, yet is controllable in an unregulated market. 4. The most common pricing mistakes include: a. pricing that is too __________ oriented b. prices that are not revised to reflect __________ changes c. pricing that does not take the rest of the marketing __________into account d. prices that are not varied enough for different product items and market __________ 5. Many companies want to set a price that will __________ current profits. 6. Some companies want a __________ market-share position, believing the largest market share will eventually enjoy low costs and high long-run profit. 7. Price must be coordinated with __________, __________, and __________ decisions to form a consistent and effective marketing program. 8. A company wants to charge a price that covers costs for __________, __________ & __________ the product. 9. __________ costs (aka overhead) are costs that do not vary with production or sales level. 10. __________ costs vary with the total of units produced. 11. __________ costs are the sum of the fixed and variable costs for any given level of production. 12. While costs set the lower limits of prices, the __________ and __________ set the upper limit. 13. Before setting prices, a marketer must understand the relationship between __________ & __________ for a product. 14. __________, part of effective revenue management, involves training sales & reservations employees to continuously offer a higher-priced product. 15. __________-oriented pricing means the marketer cannot design a marketing program and then set the price. 16. Good pricing begins with analyzing consumer __________ and price __________.

If demand is __________ rather than __________. 22. sellers generally consider lowering their prices. 29. a company must consider the impact its pricing policies will have on its __________-environment. When __________ is hard to measure. When reacting to environmental pressures created by the __________-environment. the __________-based approach (perceived value pricing) c. 20. the more __________ he or she is to the product’s price. 24. and target profit pricing) b. break-even analysis. the __________-based approach (cost-plus pricing. __________-based pricing uses the buyers’ perceptions of value. Many purchases have __________ costs. 23. prestige. 26.17. The more someone spends on a product. Consumers are less price-sensitive when __________ products are hard to find. The simplest pricing method is __________-plus pricing. Creating the perception that your offering is __________ from those competitors avoids price competition. 31. Companies set prices by selecting a general pricing approach including one or more of these sets of factors: a. 25. . not the seller’s cost. with less attention paid to costs or demand. or exclusiveness. Customers are more price-sensitive when the price of the product accounts for a large share of the total cost of the end __________. adding a standard markup to the cost of the product. Buyers are __________ price-sensitive when the product is unique or high in quality. 30. as the key to pricing. firms feel that the going price represents the collective wisdom of the industry concerning the price that will yield a fair return. the __________-based approach (going rate) 28. Consumers tend to equate price with __________. 18. 21. A strategy of ______ -______ pricing is the establishment of price based largely on those of competitors. 27. especially when they lack prior product experience. 19. Existence of __________ of which buyers are unaware cannot affect their purchase behavior.

40. and __________. 34.sellers combine several products and offer them at a reduced price.32. Companies often adjust basic prices to allow for differences in __________. 35. 39. they temporarily price their products below list price. __________ demand leads to price increases. The concept behind revenue management is to manage __________ & __________ effectively by pricing differences based on the elasticity of demand for selected customer segments. __________ pricing refers to segmentation of the market & pricing differences based on price elasticity characteristics of these segments.hotels or restaurants seeking to position themselves as luxurious and elegant enter the market with a high price to support this position. Market-__________ Pricing . 38. 37. __________. 33. When companies use __________ pricing. 36.other companies set a low initial price to penetrate the market quickly & deeply. __________ Pricing . . Product-__________ Pricing . attracting many buyers and winning a large market share. Market-__________ Pricing . An effective revenue management system establishes __________ to prohibit customers from one segment receiving prices intended for another.setting a high price when the market is price-insensitive. 41.