MarketingLesson 5 of 6 in the course Pricing Products and Services

Product, Psychological, and Economy Pricing Strategies

5 flashcards · 5 quiz questions · 5 match pairs · 5 fill-in sentences · English

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Summary

Marketers often adjust prices for existing products as products move through their life cycles. This lesson introduces three strategies that help companies organize prices across related offerings or encourage customers to buy complementary products together.

A product line is a group of related products differentiated by features and price. With product line pricing, a company sets prices for products in a line at similar or distinct levels to appeal to different customer groups.

All flashcards

Product line pricing
Setting coordinated prices across related products to appeal to different target markets and reflect perceived value.
Captive product pricing
Pricing a core product and a related product customers need to use it.
Bundle pricing
Offering multiple products together for one price.
Odd-even pricing
Using odd or even price endings to influence perceptions of value or quality.
Economy pricing
Keeping prices low, often by minimizing costs and relying on high sales volume.

Quiz questions

  1. What is the main purpose of product line pricing?Answer: To coordinate prices across related products for different target markets.
  2. A device requires a separate supply that customers must replace to keep using it. In captive product pricing, what role does the supply play?Answer: It is the captive product linked to the core product.
  3. Why can bundle pricing lead a customer to spend more in one transaction?Answer: A combined offer can encourage the customer to buy several products.
  4. Why might a price of $19.95 be perceived as a value?Answer: Its odd ending can make it seem lower than a nearby round price.
  5. Which approach is characteristic of economy pricing?Answer: Keeping prices low, limiting costs, and relying on high sales volume.

Based on Principles of Marketing by Dr. Maria Gomez Albrecht, Dr. Mark Green, Linda Hoffman (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.

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