Pricing Strategies for Business

Review questions

1.What is price? Functions and importance of price in the economy. Signaling function of price. The components of price. How price may affect consumer behavior?

2.Describe the internal and external factors affecting the firm's pricing decisions. Discuss the impact of the economy on a company's pricing strategies. Discuss the importance of pricing in today's fast changing environment.

3.We may define firms as either price-takers or price-makers. Distinguish between the two and examine why we might observe greater price instability in markets where firms are price-takers as opposed to price-makers.

4.Define the price strategy. Pricing objectives and actions to achieve them. Price ceiling, price floor.

5.Price and the life-cycle of the product. The central elements of the pricing process.

6.Price structure. Cost structure. Fixed costs, variable costs. Average costs. Costs at different levels of production. Cost behavior.Break even. Margin of safety.

7.Factors affecting prices of the products. Price elasticity. Non-pricing factors affecting demand. Factors leading to less price sensitivity. Switching costs.

8.Describe three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs and competitors strategies when setting price.

9.What determines the size of the mark-up in mark-up pricing? Provide examples to illustrate how the size of mark-up differs between firms in different markets.

10.How does competition-based pricing work? Evaluation of competitors' prices: sources of information about competitors and prices.Types of competition-based pricing. Advantages and disadvantages.

11.Customer value-based pricing: definition, steps. Advantages and disadvantages. Explain how a company can differentiate its product through value-creation to justify a higher price.Discuss how companies adjust their prices to take into account different types of customers and situations.

12.Customer perception of value. Components of value. The consumer psychology and pricing. Provide different examples of psychological pricing techniques.

13.Discuss the key issues related to initiating and responding to price changes. How to respond to a price attack by an aggressive competitor?

14.Describe major strategies for pricing new products. Steps in developing new product pricing. Briefly describe Van Westendorp and Gabor-Granger Methods of pricing.

15.Compare and contrast market-skimming and market-penetration pricing strategies and discuss the conditions under each is appropriate.

16.Explain how companies find a set of prices that maximize the profit from the total product mix. Give three examples of product mix pricing strategies.

17.How often does the company need to adjust the prices of existing products? What situations may lead a firm to consider cutting its prices? Discuss possible reactions of a company to price changes of the products of its competitors. What is the possible reaction of the customers to price cuts and price increases?

18.Define "prestige pricing". What are the main principles of this strategy? Define target customer group and their expectations and needs.Provide examples of such pricing strategy. What risks can you mention?

19.Compare and contrast any three price-adjusting strategies.

20.Compare and contrast the geographic pricing strategies that companies use for customers located in different parts of the country or the world.

21.International pricing. What factors influence the price a company charges in different countries? Why prices for the same products can differ across countries and regions?

22.Discuss the social and legal issues that affect pricing decisions. Provide an example of the different types of price discrimination and indicate the necessary conditions for each to exist.

23.Regulation and Prices. Give examples of fraudulent price practices. Define deceptive pricing. Predatory pricing.

24.Describe common pricing mistakes. How the technology and changes related to customer behavior, greater access to information affect the process of setting the prices by the companies?

25.Price sensitivity analysis: importance, key steps, sources of information, tools and techniques.

Give an example for each of the 25 questions