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 |  Marketing A McGraw Hill and QUT Custom Publication
Arriving at the Final Price
Learning ObjectivesChapter 11 - Outline
AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:
- Understand how to establish the initial "approximate price level" using demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches.
- Identify the major factors considered in deriving a final list or quoted price from the approximate price level.
- Describe adjustments made to the approximate pricelevel on the basis of geography, discounts, and allowances.
- Prepare basic financial analyses useful in evaluating alternative prices and arriving at the final sales price.
- Describe the principal laws and regulations affecting pricing practices.
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Chapter 11 - Summary
- Four general approaches for finding an approximate price level for a product or service are demand-oriented, cost-oriented, profit-oriented, and competition-oriented pricing.
- Demand-oriented pricing approaches stress consumer demand and revenue implications of pricing and include eight types: skimming, penetration, prestige, price lining, odd-even, target, bundle, and yield management.
- Cost-oriented pricing approaches emphasize the cost aspects of pricing and include three types: standard markup, costplus, and experience curve pricing.
- Profit-oriented pricing approaches focus on a balance between revenues and costs to set a price and include three types: target profit, target return-on-sales, and target return-on-investment pricing.
- Competition-oriented pricing approaches stress what competitors or the marketplace are doing and include three types: customary; above-, at-, or below-market; and loss-leader pricing.
- Given an approximate price level for a product, a manager must set a list or quoted price by considering factors such as one-price versus a flexible-price policy; the effects of the proposed price on the company, customer, and competitors; and balancing incremental costs and revenues.
- List or quoted price is often modified through discounts, allowances, and geographical adjustments.
- Legal and regulatory issues in pricing focus on price fixing, price discrimination, deceptive pricing, geographical pricing, and predatory pricing.
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2003 McGraw-Hill Higher Education