8Pricing Strategies Skimming Penetration Status quo Status quo pricing policy:the use of relatively similar price as compared with competitive offeringsPenetrationStatus quo
9Tactics for Fine-Tuning the Base Price Special pricing tacticsDiscounts, Allowances, RebatesGeographic pricing
10Reductions From List Price Cash DiscountsCash discount: price reduction offered to a consumer, industrial user, or marketing intermediary in return for prompt payment of a bill.
11Reductions From List Price Cash DiscountsTrade Discounts: payment to a channel member or buyer for performing marketing functionsTrade Discounts
12Reductions From List Price Cash DiscountsQuantity discount: price reduction granted for a large-volume purchase.Sliding scale rebate.Trade DiscountsQuantity Discounts
13Three Basic Marketing Price Structures/Services Challenges:1. Costs difficult to trace.2. Labor is more difficult toprice than materials.3. Costs may not equal the value that customers perceive the services are worth.Challenges:1. Small firms may charge toolittle to be viable.2. Prices may not reflect customer value.Cost-basedCompetition-basedDemand-based/valueChallenges:1. Monetary price must be adjusted to reflectthe value of non-monetary costs.2. Information on costs is less available tocustomers; hence, price may not be a central factor.
16Basing-point Pricing $30 freight $20 freight Seattle customer pays $130Los Angelescustomerpays $120St. Louis plant is“basing-point”$100 base priceChicago customerpays $110
17Other Pricing Tactics Single price Offers all goods/services at the same priceTwo part pricingCharge two separate amounts for 1 productPrice LiningSeveral line items at specific price pointsLeader PricingSell product at near or below costBait PricingLure customers through false or misleadingprice advertisingOdd-Even PricingOdd-number prices imply bargainEven-number prices imply qualityPrice BundlingCombining two or more products in asingle package