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T8: Pt 1 and 4 - Pricing (Adapting price (p.482) ('Promotional…

- - - - The general association the higher price means higher quality
      - Only significant when it is difficult for the consumer to judge the quality for themselves
      - Some companies will also put limits on supply in order to increase exclusivity and reduce price sensitivity
      - E.g. CGC - quality judgement needs to be across the board, not ok to have high quality course, matched with poor quality food
    - - Odd number associates with bargain/discount so should be used that way and not used by high-end products
      - Staying in the lower bracket of the first number is psychological successful at reducing the price perception
      - Getting as close as possible to the next bracket also attracts people wanting to feel they have paid more, i.e. the $34 or $39 example, some people will be lost if it is $40, but those with a lower-bound price threshold of $40 will justify $39 as ok, but perhaps not $34.
      - Overuse of prices ending in 9 or sale signs will diminish the effectiveness
    - - Usual discounted price
      - Expected future price
      - Historical competitor price
      - Lower-bound price
      - Upper-bound price
      - Last price paid
      - Typical price
      - 'Fair price'
      - Consumers may draw on memory, or use external cues - which is where the seller can have some influence
- - - - Discounts become the norm
      - Industries self-destruct under weight of the practice
      - Price becomes 'soft'
      - Undermines the 'real' value of the product
      - Companies need to monitor discounts
        
        Conduct a 'net price analysis' to determine the 'real price'
        
        Determine if some sales people / stores are overusing discounts
  - - - Reduce price on well-known product
      - Idea is to increase traffic and add-on sales
  - - - Cost - The process cost must not outweigh the benefits
      - Goodwill - must not damage customer goodwill
      - Protectable - Competitors must be consider in the high-price segment
      - Resellable - lower priced customer must not be able to resell to higher priced customer
      - Legal - Some discriminatory practise are illegal in some places
      - Segmentable - the different segments must show different demand