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Marketing Management Dersi 3. Ünite Sorularla Öğrenelim

Pricing And Price Management

1. Soru

What is the formal ratio of price from economic perspective?

Cevap

Price is the amount of money paid by consumers to possess a product or get a service. Therefore, it can be considered as a formal ratio from economic perspective:

Price= Quantity of money or goods and services received by the seller /
Quantity of goods and services received by the buyer


2. Soru

What are the external factors affecting price decisions?

Cevap

The external factors that a marketing manager needs to take into consideration when making a pricing decision are the market and demand structure of the firm, economic factors such as inflation or stagflation, the costs and prices of both direct and indirect competitors, the desires and requirements of its distribution channel, legal regulations in the country it operates, and the societal concerns.


3. Soru

What are the internal factors affecting price decisions?

Cevap

The internal factors affecting price decisions are;

1. Costs: Cost is the lower limit of price (or price floor). There are different kinds of costs including fixed costs, variable costs, and total costs. Fixed costs refer to costs which are independent from the level of production. For example, rental fee should be paid monthly regardless of production or sales level. Variable costs are the ones that vary based on production level. For instance, inputs of a car such as materials, tires, etc. vary with the level of production. Total costs include both fixed costs and variable costs for a given production level.

2. Pricing aims: Pricing aims include survival, financial, and marketing aims. Survival aims cover the short-term and try to carry on the activities of the company. Financial aims such as profit maximization or cash flow focus on the medium term.

3. Other Marketing Mix Elements: Product, place, and promotion should give messages
to consumers in the same direction with price.


4. Soru

What are the major pricing strategies?

Cevap

Companies use three major pricing strategies including value-based pricing, costbased pricing, and competition-based pricing.

In value-based pricing, customers’ value is used to charge a price for a product. Because the strategy is customer-driven, starting point is consumer. There are two types of value-based pricing: goodvalue pricing and value-added pricing. Goodvalue pricing combines higher quality with a lower price. Value-added pricing refers to differentiating products by adding valuable features that support higher prices.

Cost-based pricing includes different approaches such as cost-plus pricing or standard mark-up, break-even analysis, and target profit pricing. Cost-plus pricing approach determines the unit cost of the product firstly.

Break-even pricing is a cost-based pricing approach, too. The company determines the price to reach break-even point or target profit.

Target profit pricing offers to sell products more than break-even volume with a price level which will lead to a target profit.

Competitor-based pricing includes customary pricing, above-, at-, or below-market pricing, and lossleader pricing. In customary pricing, price is dictated by the market. In above-, at-, or below-market pricing, competitors’ prices charged for similar products are used to set prices. In loss-leader pricing, many companies intentionally set a price level below customary price.


5. Soru

What are the steps of price setting process?

Cevap

This process consists of six steps:

• Identify pricing constraints and objectives
• Estimate demand and revenue
• Estimate cost, volume, and prot relationships
• Select an approximate price level
• Set list or quoted price
• Make special adjustments to list or quoted price


6. Soru

What are the new-product pricing strategies?

Cevap

Two pricing strategies can be used in the introductory stage: market-skimming and market-penetration. Market-skimming pricing sets high prices to skim higher revenue from the market. Prices are dropped to attract new buyers after a while. In other words, prices are decreased step by step to sell the products to new consumers. In market-penetration pricing, companies set low prices to penetrate the market as much as possible.


7. Soru

What are product mix pricing strategies?

Cevap

There are six different product mix pricing strategies including product line pricing, by-product pricing, optional-product pricing, captive-product pricing, two-part pricing, and product bundle pricing.

In product line pricing, all the products in the line are considered.

By-product pricing involves products produced unintentionally as an output of the manufacturing process of the main product.

Optional-product pricing refers to accessory products sold with the main product.

Captive-product pricing refers to complementary products which are used with the main product such as a printer cartridge.

Two-part pricing includes a fixed fee and a variable usage fee. 

In product bundle pricing, less demanded products are sold together with highly demanded ones at a discounted price.


8. Soru

What does dynamic pricing mean?

Cevap

Dynamic pricing is a practice of adjusting prices continually to maximize revenue.


9. Soru

What does psychological pricing mean?

Cevap

Psychological pricing adjusts prices based on a psychological viewpoint rather than an economic perspective.


10. Soru

What does discount and allowance pricing mean?

Cevap

Discount and allowance pricing refers to a reduction in the price of the products for consumers who buy large quantities or pay early.


11. Soru

What does segmented pricing mean?

Cevap

Segmented pricing is a practice of differentiating prices based on customer, location, or product rather than cost.


12. Soru

What is geographical pricing?

Cevap

Geographical pricing refers to setting different prices for consumers who are in different locations in order to cover high shipping costs.


13. Soru

What does the term of promotional pricing refer to?

Cevap

Promotional pricing is a practice of reducing prices for a limited time period.


14. Soru

What is international pricing?

Cevap

International pricing refers to setting different prices for different countries.


15. Soru

What is price cut?

Cevap

Companies cut prices to increase sales and market share in case of excess capacity or insufficient demand.


16. Soru

What is price increase?

Cevap

Buyers react to price changes differently. Price increase can be perceived as high quality or eligibility while price cut can be considered as a low quality, old fashioned, or a less demanded product.


17. Soru

What is the advantage and disadvantage of market trials?

Cevap

Its advantage is that it is highly accurate. Its disadvantage is that it is expensive or not an option sometimes.


18. Soru

What is the advantage and disadvantage of value analysis?

Cevap

Its advantage is that it provides customer perspective. Its disadvantage is that share of value can be difficult to estimate.


19. Soru

What is the advantage and disadvantage of demand curves?

Cevap

Its advantage is that it is useful for product planning. Its disadvantage is that it is sometimes difficult to construct.


20. Soru

What is advantage and disadvantage of conjoint analysis?

Cevap

Its advantage is that it is a nice model for demand in established markets. Its disadvantage is that it has a narrow range and limited view of possibilities.


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