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Learn about the latest pricing strategies and tactics used by businesses to increase profitability in the Pricing Strategy and Tactics course.
What strategy is when the firm expects that its lower costs will enable it to profit despite competitive pricing?
Profitable price decisions are those that result in sales volumes in the area to the right of the curve.
The key to integrating costs and quantitatively assessing the consequences of a price change is the incremental break-even analysis.
What pricing calls for sacrificing gross profit in order to reduce expenses further down the line?
What are those that directly result from implementing a price change or from offering a version of the product at a different price level?
What prices are not necessarily cheap, but they are low relative to perceived value in the target segment?
What refers to the overall satisfaction that a customer receives from using a product or service offering?
What are the costs associated with changes in pricing and sales?
_______ are based on serving the needs of only a particular customer segment or niche, which enables the firm to tailor its operations to meet the unique needs of that segment more cost-effectively
What rights define the scope and role of each person’s participation in the decision-making process?
Negative-sum games are those in which the very process of competition creates benefits.
involves winnowing the alternatives to a manageable number in order to conduct a more detailed product evaluation that ultimately leads to choice
What is a tactical lever to close deals and achieve sales objectives?
the Harvard competition guru
What is the utility gained from the product?
What step involves the definition of the major process activities such as opportunity assessment, price setting, negotiation, and contracting
What strategy optimizes immediate profitability only when the profit from selling to relatively price-insensitive customers exceeds that from selling to a larger market at a lower price?
What step creates a visual depiction of the processes by which pricing decisions are currently made?
What type of buyer purchase a disproportionate share of sales volume in most business-to-business markets?
What are those distributors in countries where prices are lower will ship products to one where prices are higher, which often happens simply due to changes in currency values?
What producer can charge lower prices and sell more because it can profitably use low prices to attract more price-sensitive buyers?
What includes the company’s pattern for passing along changes in raw materials costs (such as requiring that all long-term contracts allow for adjustments versus adjusting only after a fixed-price contract expires) and its pattern for inducing product trials.
What enables managers to identify the characteristics or drivers that cause some customers to be more expensive or less expensive to serve?
refer to the difference between the use value of a product and its market price
What is a strategic initiative to cut costs and achieve advantage?
key to integrating costs and quantitatively assessing the consequences of a price change
What pricing strategy is setting initial prices high and reducing them over time?
“notification” rights should be allocated to individuals that will use or be affected by the pricing decisions in other decision-making processes.
sales reports from a company’s own records or from a sales monitoring service
When a price-cutting competitor is relatively “strong” and the cost of retaliation is greater than the value of the sales loss prevented, one cannot afford simply to ignore the threat and proceed as if nothing had changed
Decision rights enable an individual to provide information before the decision is made.
Most companies in competitive markets are driven by a focus on revenue growth, which they pursue by trying to be all things to all people, rather than by a focus on creating value more cost-effectively.
What pricing is when upstream suppliers might be independent companies or independent divisions of the same company that set the prices of products that pass between them?
_______ are those in which the process of competition imposes costs on players
What step is defined by a price ceiling and floor for each segment?
the utility gained from the product
An ideal price metric that tie what the customer pays for a product or service directly to the economic value received and the incremental cost to serve
What influence reference prices strategically?
Who evaluates the buyer’s willingness to pay?
What pricing strategy are not necessarily cheap, but they are low relative to perceived value in the target segment?
What value accounts for the fact that the value one can capture for commodity attributes of an offer is limited to whatever competitors charge for them?
What is the maximum price that a “smart shopper,” fully informed about the market and seeking the best value, would pay?
What step creates a series of redesigned pricing processes for each of the major pricing activities identified in step one?
What process in costing is to measure the cost incurred because a product is sold, or not incurred because it is not sold?
What pricing strategy involves a strategic decision not to use price to gain market share, while not allowing price alone to restrict it?
What is the formulas and calculations that estimate the differentiated monetary worth of each unit of product performance?
What strategy begins with a price that attracts the least price-sensitive buyers first?
According to Needs-Based Positioning, serving a uniquely wide or narrow geographic market, based on the firm’s cost structure, can create a unique cost and service advantage.
_______ is the agreement by the seller to bear part of the shipping costs of the product, the amount of which depends upon the buyer’s location.
What are the rules or habits, either explicit or cultural, that determine how a company varies its prices when faced with factors other than value and cost that threaten its ability to achieve its objectives?
Typically, input rights are granted to individuals from finance, forecasting, and research that provide critical data but are not responsible for commercial outcomes.
What are the two forms of differentiation value?
the price of the customer’s best alternative
What represents the total cost savings or income enhancements that a customer accrues as a result of purchasing a product?econ
What archetype in which pricing decisions are made and managed at the corporate level?
What is the term for the highest allowable price point?
Price competition is usually a positive-sum game since the more intense price competition is, the more it undermines the value of the market over which one is competing.
What value depends on the alternatives customers have available to satisfy the same need?
coalitions with strategic partners that coordinate or share value chains to give a company a shared cost or differentiation advantage.
What is tendency to evaluate price differences proportionately?
the set of alternative products under consideration for purchase
What pricing strategy involves setting a price low enough to attract and hold a large base of customers?
What pricing involves an integration of costs and customer value?
What type of economic value is associated with differentiation?
What pricing is example of segmenting by time of purchase?
What value is maximum price that a “smart shopper,” fully informed about the market and seeking the best value, would pay?
What is designed to capture high margins at the expense of large sales volume?
What producer which cannot afford to underbid low-cost producers for the patronage of more price-sensitive buyers;
What is being managed by professional procurement managers using sophisticated information systems and aggressive negotiation tactics?
_____ used by sales people to develop customer-specific monetary value estimates with the customer in the course of a sales call.
The break-even sales curve is a simple, yet powerful tool for synthesizing and evaluating the dynamics behind the profitability of potential price changes
What rights enable an individual to provide information before the decision is made?
______ is one that causes revenues to vary with differences in the two key elements that drive potential profitability
_______ are based on the customer’s total purchases over a month or year rather than on the amount purchased at any one time
What is the agreement by the seller to bear part of the shipping costs of the product, the amount of which depends upon the buyer’s location?
What refers to the many ways that a product creates innate satisfaction for the customer?
What archetype is in which each business unit has a dedicated pricing group that is only loosely aligned with corporate pricing?
What is the most important element for most business-to- business purchases?
What value is the most important element for most business-to- business purchases?
What value is the net benefits that your product or service delivers to customers over and above those provided by the competitive reference product?
What costs are those for product design, advertising, and overhead?
What department in organization is n charge of satisfying customers?
What is the final stage of buying process?
Who takes a personal interest in the customer, asking what the customer does for a living (ability to pay), how long he has lived in the area (knowledge of the market), what kinds of cars she has bought before (loyalty to a particular brand), where she lives (value placed on the dealer’s location), and whether she has looked at, or is planning to look at, other cars (awareness of alternatives)
What price setting process determines the amount of differential value to be captured with the price?
What do health clubs offer in order to influence value perception?
the worth of whatever differentiates the offering from the alternative
What pricing function occurs when the pricing organization owns the right to make key decisions, but does not have the power to enforce those decisions in the market place?
Cost on Past expenditures on research and development is what type of cost?
What are the costs of raw materials in a manufacturing process?
What value is the heart of pricing strategy?
a form of self-induced buyer identification— especially through the use of coupons and sales promotions, a frequent tool of consumer marketers
What strategy in which the firm focuses its marketing efforts on developing unique attributes (or images) for its product?
What tool is used by sales people to develop customer-specific monetary value?
What value represents the total cost savings or income enhancements that a customer accrues as a result of purchasing a product?
What refers to rules or habits, either explicit or cultural, that determine how a company varies its prices when faced with factors other than value and cost to serve that threaten its ability to achieve it objectives?
What rewards those customers who are aggressive negotiators?
What is the requirement for strategic pricing?
individual purchase reports from members of a consumer panel
What costs are those that either have not yet been incurred or can be reversed?
What value refers to the many ways that a product creates innate satisfaction for the customer?
What is the units to which the price is applied?
What do buyer considers a reasonable and fair price for a product?
What type of structure is appropriate for diversified businesses with little overlap in market type?
What is the term when high-end buyers perceive significantly greater value from purchasing this product, relative to other buyers?
What is the term for the lowest allowable price point?
What the stage at which the customer becomes aware of a need and begins the search for a suitable offering to satisfy it?
What department in organization is in charge of covering costs?
Like chess, pricing is a “game,” as defined by game theorists, because outcomes depend not only on a company’s own pricing decisions but also on how customers and competitors respond to them.
What stage has a critically important stage for complex goods with a high cost of search?
What rights provide a mechanism for senior managers to overturn pricing decisions when they conflict with broader organizational priorities?
a means to charge different customers different price levels for the same products and services using the same metrics
What are those costs that a company is irreversibly committed to bear?
Refers to the overall satisfaction that a customer receives from using a product or service offering
What becomes a mechanism for raising prices for managers?
What includes costs that are not incremental and are therefore irrelevant to evaluating the proposed opportunity?
What value is calculated as the price of the customer’s best alternative plus the worth of whatever differentiates the offering from the alternative?
What means that differences in pricing across customers and changes over time reflect differences or changes in the value to customers?
What stage is when customer collects initial product data with the objective of narrowing down the choice set to a manageable number of options?
What is the statistical technique for identifying which customers are paying significantly more or significantly less than the band of “peer” prices for a given type of transaction?
An effective pricing decision should involve an optimal blending of, not a compromise between, internal financial constraints only.
What costing provides more realistic estimates of how support costs change with increments in sales volume?
What strategy is when a company thinks the uniqueness of its product creates a value effect that attenuates buyers’ price sensitivity, enabling the firm to price profitably despite increasing numbers of competitors?
What rights should be allocated to individuals that will use or be affected by the pricing decisions in other decision-making processes?
What is the central part for goods in which monetary value drivers?
What pricing functions often assume the role of commercial partner or expert resource?
_____ are those in which the very process of competition creates benefits.
What is the system used for financial reporting?
_______ the coordination of otherwise independent activities to achieve a common objective
What stage is when a customer gathers more detailed information to make choice based on price and value?
Profit-driven means that the company evaluates its success at price management by what it earns relative to alternative investments rather than by the revenue it generates relative to its competitors.
______ based on the company’s ability to gain access to customers in unique ways
What facilitate segmented pricing, increasing profitability,in different customer segments?
What stage is when a customer chooses distribution channel from which to make purchase and conducts transaction?
sales data for an individual retail outlet
What principle means that the company evaluates its success at price management by what it earns relative to alternative investments rather than by the revenue it generates relative to its competitors.
What price setting process develops communication plan to ensure prices are perceived to be fair?
What type of cost is the costs of selling a product, delivering it to the customer, and replacing the sold item in inventory?
What is the financial and nonfinancial cost, relative to the expenditure in the category, that a customer must incur to determine differences in features and benefits across alternatives?
a critically important stage for complex goods with a high cost of search.
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