Establishing Value
The overall sacrifice a customer is willing to make to acquire a specific product or service.
What is Price?
The most important C of the 5 C's.
What is Customers?
Set prices to signal information of how product compares with competitors.
What is competitor-based methods?
Building store traffic by aggressively pricing
and advertising a regularly purchased item,
often priced at or just above the store’s cost.
What is leader pricing?
When a firm sets a very low price for one or
more of its products with the intent to drive its
competition out of business.
What is Predatory Pricing?
Martha is not willing to drive to the gas station that is 30 minutes away from her house to save 10 cents a litre. Martha is thinking of this marketing term.
What is Overall Price?
Two levels of competition with fewer firms.
What are monopoly and oligopoly?
This pricing strategy is used to lower costs and most customers don't notice it.
What is shrinkflation?
This pricing tactic allows for easy comparison.
What is price lining?
Predatory pricing is legal under the competition act.
Hint: True or False Question
What is false?
Predatory pricing is illegal under the competition act.
The reason why someone would spend $300 on a bottle of wine instead of $30.
What is Price Can Signal Quality?
Your Mom owns a jewelry store and wants to find her break-even point in units. She has total fixed costs of $5,000, her variable costs per unit is $20, and her sales price per unit is $40. How many units does she need to sell to break even?
What is 250 units?
Breakeven Units = Fixed costs/ Contribution per unit
Break even Units = 5000/40-20 = 250 units
The example used in lecture and in the textbook for pricing strategies.
Hint. Apple
What is the price skimming strategy?
The three consumer price reductions mentioned in lecture.
What are coupons and rebates?
What are markdowns?
What are quantity discounts for customers.
This company used deceptive pricing comparing $20 to their price of $12.99
Hint: Used in lecture
What is Winners?
Price is not only a sacrifice it is also this.
What is an information cue?
Employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.
What is Grey Market?
This company has already shelved its layaway program in favour of Buy Now Pay Later.
What is Walmart?
Business to business pricing tactics
Hint: There are five
1. What are seasonal discounts?
2. What are cash discounts?
3. What are allowances?
4. What are quantity discounts?
5. What are uniform delivered vs geographic pricing?
What two companies were accused of collaborating
with independent wholesalers to bump up the prices of their chocolates to a fixed level.
What is Mars and Nestle?
Prices rarely change, except in response to this.
What is Radical Shifts in Market Conditions?
This company kept its prices high even during the recession.
Hint: What company, and why?
What is Tiffany & Co and To Protect Its Prestigious Image?
The five pricing methods mentioned in the textbook.
1. What is cost-based method?
2. What is competitor-based method?
3. What is value-based method?
4. What is improvement value method?
5. What is cost of ownership method?
Amy is deciding whether she should buy a buy two get one free deal from Walmart of 300 grams of cereal per box at $5.50, or $10 on a 450 gram box of cereal. What pricing tactic should she use and which deal should she pick?
Hint: Size matters
What is quantity discount?
What is she should buy a buy two get one free deal of 300 grams of cereal per box at $5.50?
Explanation:
"Buy two, get one free" deal (900 grams for $11):Cost per gram = $11 / 900 grams ≈ $0.0122 per gram
50-gram box for $10: Cost per gram = $10 / 450 = ≈ $0.0222 per gram
In recent years, Canada's Competition Bureau investigated seven companies for allegations of bread price-fixing, these four companies were mentioned in the textbook.
What are Loblaw, Canada Bread, Sobeys, and Metro?