Examples of competitive-based pricing in the following topics:
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- Competitive-based pricing occurs when a company sets a price for its good based on what competitors are selling a similar product for.
- Competitive-based pricing, or market-oriented pricing, involves setting a price based upon analysis and research compiled from the target market .
- With competition pricing, a firm will base what they charge on what other firms are charging.
- One advantage of competitive-based pricing is that it avoids price competition that can damage the company.
- Status-quo pricing, also known as competition pricing, involves maintaining existing prices or basing prices on what other firms are charging.
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- Status quo pricing is the practice of maintaining current price levels that other firms are charging.
- Price-Quality Effect: Buyers are less sensitive to price the more higher prices signal higher quality.
- Status-quo pricing, also known as competition pricing, involves maintaining existing prices (status quo) or basing prices on the prices of competitor firms .
- Status-quo pricing, also known as competition pricing, involves maintaining existing prices or basing prices on what other firms are charging.
- Compare Nagle and Holden's nine laws of price sensitivity with status-quo pricing
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- By using this pricing method, the firm can recover its sunk costs quickly (before competition lowers the market price).
- Demand-based pricing is any pricing method that uses consumer demand, based on perceived value, as the central element.
- Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product.
- It allows the firm to recover its sunk costs quickly before competition steps in and lowers the market price.
- Value-based pricing, or value-optimized pricing is a business strategy.
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- How Coke chooses to react to Pepsi will be based on an analysis of how the firms have acted in past situations.
- A buyer's perceptions of what constitutes a benefit may vary widely based on the nature of the product.
- The current state of competition can be examined based on the following categories.
- When firms hold large market shares, consumers risk paying higher prices and getting lower quality products than when compared to competitive markets.
- Forms of abuse relating directly to pricing include price exploitation.
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- Cost-based pricing involves calculating the cost of the product, and then adding a percentage mark-up to determine price.
- Cost-plus pricing is the simplest pricing method used by companies.
- Cost-plus pricing is the simplest pricing method.
- A firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price.
- The latter is only used in periods of high competition as this method usually leads to a loss in the long run.This method, although simple, does not take demand into account, and there is no way of determining if potential customers will purchase the product at the calculated price.
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- With a totally new product, competition does not exist or is minimal.
- What price level should be set in such cases?
- Penetration pricing in the introductory stage of a new product's life cycle involves accepting a lower profit margin and pricing relatively low.
- A penetration strategy would generally be supported by the following conditions: price-sensitive consumers, opportunity to keep costs low, the anticipation of quick market entry by competitors, a high likelihood for rapid acceptance by potential buyers, and an adequate resource base for the firm to meet the new demand and sales.
- In most cases, the initial high price is gradually reduced to match new competition and allow new customers access to the product.
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- Japanese marketers have developed an approach to managing product costs that has given them a competitive advantage over US competitors.
- In Japan, a company typically starts with a target cost based on the price that it estimates the market is most willing to accept.
- Briefly, at Japanese companies like NEC, Nissan, Sharp, and Toyota, a team charged with bringing a product idea to market estimates the price at which the product is most likely to appeal to the market.
- After deducting the required profit margin from the selling price, planners develop estimates of each element that make up the product's cost: engineering, manufacturing sales, and marketing.
- US firms tend to build products, figure how much it costs to build the product, and then ask whether the product can be sold at a profitable price.
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- But what exactly is "price?
- The perception of price differs based on the perspective from which it is beign viewed.
- Ultimately, it is beneficial to view price from the customer's perspective because it helps define value -- the most important basis for creating a competitive advantage.
- If Louis Vuitton merchandise was offered at low prices it might significantly undermine the brand value, much of which is based upon exclusivity.
- Differentiate between cost, customer's view of price, and society's view of price
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- Pricing strategies are also strongly influenced by the nature and intensity of the competition in the various markets.
- Englewood Cliffs, N.J., 1999. ) Price sensitivity reduces:
- Dumping (when a firm sells a product in a foreign country below its domestic price or below its actual costs) is often done to build a company's share of the market by pricing at a competitive level.
- When companies price their products very high in some countries but competitively in others, they engage in a gray market strategy.
- A gray market comes about when individuals buy products in a lower-priced country from a manufacturer's authorized retailer, ship them to higher-priced countries, and then sell them below the manufacturer's suggested price through unauthorized retailers.
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- Satisfying customers more efficiently and effectively than competitive companies increases the chances of the organization's success.
- Based on your understanding of their needs, through research and development you must develop an appropriate product or service that fulfills those needs.
- Based on your engineering capabilities you must define your manufacturing process that delivers the right product in the most efficient and economical way.
- For this reason, "benefits" is specified in the numerator of this equation (the higher the benefits, the higher the perceived value by the customer); on the other hand, "price" is placed in the denominator since the higher the price the lower the perceived value.
- Price: What should be the appropriate price for this product that reflects not only its cost but also its benefits to compete with other products in the same segment or substitute products?