MKTG 301 Study Guide - Final Guide: Loss Leader, Price Fixing, Price Discrimination

• School: George Mason University
• Department: Marketing
• Course: MKTG 301
• Professor: Gautham Vadakkepatt

Document Summary

Three methods used to develop a pricing strategy. Cost-based pricing method (relevant costs) determines the final price to charge by starting with the cost: does (cid:374)ot re(cid:272)og(cid:374)ize the role that (cid:272)o(cid:374)su(cid:373)ers or (cid:272)o(cid:373)petitors" pri(cid:272)es pla(cid:455) i(cid:374) the (cid:373)arketpla(cid:272)e. Competitor-based pricing (cid:373)ethod fir(cid:373)s set pri(cid:272)es a(cid:272)(cid:272)ordi(cid:374)g to their (cid:272)o(cid:373)petitors" pri(cid:272)es most fir(cid:373)s still know that consumers compare the prices of their products with the different product/price combinations that competitors offer. Approaches to setting prices that focus on the overall value of the product offering as perceived by the consumer: cost of ownership method, setting prices based on the expenses incurred by processing the product over its useful life. Consumers may (cid:271)e (cid:449)illi(cid:374)g to pa(cid:455) (cid:373)ore o(cid:448)er a produ(cid:272)t"s lifeti(cid:373)e as it (cid:449)ill e(cid:448)e(cid:374)tuall(cid:455) (cid:272)ost less to own than a cheaper alternative. Improvement value method: represents an estimate of how much more (or less) consumers are willing to pay for a product relative to other comparable products how to measure value,