Chapter 10: Pricing the Product

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Chapter 10: Pricing the Product by Mind Map: Chapter 10: Pricing the Product

1. 1: Develop Sales or Market Share Objectives

1.1. Profit Objectives

1.2. Sales or Market Share Objectives

1.3. Competitive Effect Objectives

1.4. Customer Satisfaction Objectives

1.5. Image Enhancement Objectives

1.5.1. Prestige Products

2. 2. Estimate Demand

2.1. Law of Demand

2.1.1. Prestige Products

2.2. Shifts in Demand

2.3. Estimating Demand

2.3.1. Estimates of potential Sales

2.4. Price Elasticity of Demand

2.4.1. E > 1: Elastic Demand

2.4.2. E < 1: Inelastic Demand

2.5. Substitute

2.5.1. Cross-elasticity of Demand

2.6. Complements

3. 3: Determine Costs

3.1. Variable Costs

3.2. Fixed Costs

3.2.1. Average Fixed Costs

3.3. Break-Even Analysis

3.3.1. Contribution per Unit

3.3.2. Target Profit

3.3.2.1. Added to FC

3.3.2.2. Added to VC on a per-unit basis

3.4. Marginal Analysis

3.4.1. Marginal Costs

3.4.2. Marginal Revenue

3.4.3. MC = MR

4. 4: Evaluate the Pricing Environment

4.1. Economy

4.1.1. Recession

4.1.2. Inflation

4.2. Competition

4.2.1. Price Wars

4.2.2. Industry Structures

4.2.2.1. Oligopoly

4.2.2.2. Monopoly

4.2.2.3. Perfect Competition

4.3. Consumer Trends

5. 5: Choose a Price Strategy

5.1. Based on Cost

5.1.1. Cost-Plus pricing

5.2. Based on Demand

5.2.1. Target Costing

5.2.2. Yield Management Pricing

5.3. Based on Competition

5.4. Based on Customer Needs

5.4.1. Value Pricing / Everyday Low Pricing

5.5. New Product Pricing

5.5.1. Skimming Price

5.5.2. Penetration Pricing *hihihi*

5.5.3. Trial Pricing

6. 6: Develop Pricing Tactics

6.1. Pricing for Individual Products

6.1.1. Two-Part Pricing

6.1.2. Payment Pricing

6.2. Pricing for Multiple Products

6.2.1. Price Bundling

6.2.2. Captive Pricing

6.3. Distribution Based Pricing

6.3.1. Free on Board (FOB)

6.3.1.1. FOB origin

6.3.1.2. FOB delivered

6.3.2. Base-point Pricing

6.3.3. Uniform Delivered Pricing

6.3.4. Freight absorption pricing

6.4. Discounting for Channel Members

6.4.1. List Price / Recommended Retail Price

6.4.2. Trade or functional discounts

6.4.3. Quantity Discount

6.4.3.1. Cumulative Quantity Discount

6.4.3.1.1. Rebate

6.4.3.2. Non-cumulative quantity discount

6.4.4. Cash Discount

6.4.5. Seasonal Discount

7. Price

8. Demand

9. Pricing and Electronic Commerce

9.1. Dynamic Pricing Strategies

9.2. Auctions

9.3. Pricing Advantages for Online Shoppers

9.3.1. Search Engines

9.3.2. Detailed Information

9.3.3. Lower's costs through time saving

10. Psychological Issues in Pricing

10.1. Buyer's pricing expectations

10.1.1. Internal Reference Prices

10.1.1.1. Reference Pricing Strategies

10.1.1.2. Assimilation Effect

10.1.1.3. Contrast Effect

10.1.2. Price/Quality Inference

10.2. Psychological Pricing Strategies

10.2.1. Odd-Even pricing

10.2.1.1. Odd

10.2.1.2. Even

10.2.2. Price Lining

11. Legal and Ethical Considerations in Pricing

11.1. Bait-and-Switch

11.2. Loss Leaders

11.3. Price Fixing

11.3.1. Horizontal Price Fixing

11.3.1.1. Cartel

11.3.2. Vertical Price Fixing

11.3.3. Predatory Pricing