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Pricing (Part II) Jeremy Kees, Ph.D. Select Pricing Method • “3 Cs” – Customer Demand – Cost Function – Competitors Prices Pricing Strategies • Skimming – High-End Products – Introduction Stage of the PLC – Adidas / Fathead • Penetration Pricing – Generates Trials Pricing Strategies • Value Pricing - EDLP – Wal-Mart – good example of EDLP? • Competitive Pricing – Compete on other product attributes Strategies • “Freemium” strategy —giving some offering away for free while profiting from extras that are priced appropriately – Skype – Ryanair • Parody • "We will charge for every possible thing we can think to charge for, but it will always be the passengers' choice whether they pay it or don't pay it“ – Ryaniar CEO Michal O’Leary Starbury Model… • interview “List” versus “Market” Prices • Reductions from List Price – – – – – Cash Discount Trade Discount Quantity Discount Allowances Rebates Pricing Policies • Price-Quality Inferences – Moderated by category/product knowledge • Price Cues – Reference Prices – Psychological Pricing • Variable Pricing • Negotiated Prices • Fixed Pricing • Product-Line Pricing • Promotional Pricing • Loss Leaders • Bundling