MKT 702 Study Guide - Value-Based Pricing, Demand Curve, Target Costing
Document Summary
Effectively designing and implementing pricing strategies requires thorough understanding of consumer pricing psychology and systematic approach to setting, adapting, and changing prices. Customers actively process price information, interpreting it from the context of prior purchasing experience, formal communications, informal communications, point-of-purchase or online resources, and other factors. Consumers use price as an indicator of quality. Some brands adopt exclusivity and scarcity to signify uniqueness and justify premium pricing. Five major objectives in pricing: survival if plagued with overcapacity, intense competition, or changing consumer wants. Market-penetration pricing: pricing strategy where prices start low to drive higher sales volume from price sensitive customers and produce productivity gains: maximum market skimming unveiling new product favour setting high prices. Inverse relationship between price and demand: the higher the price, the lower the demand. There are few or no substitutes or competitors. They do not readily notice the higher price. They are slow to change their buying habits.
