Lecture #15: Pricing

These lecture notes are provided as a study aid in preparation for examinations. Students should review their class notes, and compare to the outline presented below. To assist in reviewing for exams, students are advised to rewrite their notes in accordance with the outline.

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Of the four Marketing Program Variables (i.e., the 4Ps), Price is the one that is likely to cause the most problem for consumers. In many cases, consumers claim to want value and low prices, while in other cases, consumers exhibit totally irrational (and inconsistent) behavior by willing to pay high prices.

In this lecture, we'll examine the key issues in pricing, as well as the current trends.

A. Pricing strategies:

  1. EDLP
  2. High/Low
  3. Pros and cons of each
  4. Coupons
  5. Rebates
  6. Leader pricing
  7. Price bundling
  8. Multiple Unit pricing
  9. Price lining
  10. Odd pricing

B. Setting prices:

  1. Demand-oriented
  2. Cost-oriented and Keystoning
  3. Markup on cost
  4. Markup on retail
  5. Maintained markup
  6. Markdowns
  7. Additional markups
  8. BEP

C. Factors Affecting Pricing:

  1. Substitution Effect
  2. Total expenditure effect
  3. Inability to compare
  4. Cost/benefit relationship
  5. Situation effect

D. Legal Issues:

  1. Price discrimination
  2. Quantity discounts
  3. Functional discounts
  4. Vertical price fixing
  5. Horizontal price fixing
  6. Predatory pricing
  7. Comparative price advertising
  8. Bait-and-switch

Course Syllabus

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