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WEEK 5 - Coggle Diagram

- - - - fixed costs
        
        costs that do not vary with production or sales level. Ex: bills for rent, air-conditioning, salaries and interest,..
      - variable costs
        
        vary directly with the level of production
      - total costs
        
        sum of fixed and variable costs
    - - costs at different levels of production
      - costs as a function of production experience
      - cost-plus pricing
      - break-even analysis and target profit pricing
        
        break-even= variable cost/ (price-fixed cost)
  - - - Def: Offer just right combination of quality and good service at fair price
      - Important part: Everyday low pricing (EDLP) strategy
        
        Company must have everyday low cost first
    - - Def: To build the company's pricing power to escape competition price and justify higher price without losing market share
      - To retain pricing power, firm must retain or build VALUE for its market offering. Customer want value and are willing to pay for it,
- - - - Setting price steps between product line items
      - The price steps cost differences between the products in the line.
        
        Account for differences in customer perceptions of the value of different features.
    - - Pricing optional or accessory products sold with the main product
        (not affect the usage of main product)
    - - Pricing products that must be used with the main product.
        (obligatory)
      - Ex: blades for a razer/ ink for printer
    - - combine several of their products and offer the bundle at a reduced price
      - Price bundling can promote the sales of products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle.
  - - - quantity discount
        
        when buyer buy large volume
      - seasonal discount
        
        buy merchandise or services out of season.
      - cash discount
        
        pay their bills promptly
      - functional discount
        
        offered by seller to trade-channel members
    - - customer-segmented pricing
        
        Different customers pay different prices for the same product or service
      - Location-based pricing
        
        Different prices for different locations, even though the cost of offering each location is the same
      - Time-based pricing
        
        Different prices by the season, the month, the day, and even the hour.
      - Product-form pricing
        
        Different versions of the product are priced differently but not according to differences in their costs.
      - CONDITIONS
        
        segment must shows different degrees of demand
        
        the costs of segment cannot exceed the extra value obtained from price difference
        
        Market mus be segmentable
        
        segmented prices should reflect real difference in customer's perceived value
      - Not good in long run
    - - Price says something about the product. Many consumers use price to judge quality
      - reference price
        
        prices that buyers carry in their mind and refer to when looking at given product
    - - several forms
        
        The seller may simply offer discounts from normal prices to increase sales and reduce inventories.
        
        special-event pricing
        
        low-interest financing, longer warranties, or free maintenance to reduce customer's "price"
      - temporarily pricing products below the list price, and sometime even below the cost to increase short-run sales
    - - Adjusting prices continually to meet the needs of buyers and market situations
      - Ex: Grab, Amazon,...
  - - - Setting high price for a new product to skim maximum revenues layer by layer who willing to pay for high price
      - Conditions
        
        the costs of producing a smaller volume cannot be so high that they cancel out the advantage of charging more
        
        superior image and quality
        
        enough buyers
        
        competitor cannot jump in easily and undercut the high price
    - - setting low price for a new product to attract a large number of buyers and a large market share
      - Conditions
        
        The market must be highly PRICE-SENSITIVE so that a low price produces more market growth.
        
        Costs fall with large volume
        
        low price must help keep out the competition
        
        pricer must maintain its low-price position