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how panies adjust their prices to take into account different types of customers and situations. ? Know the key issues related to initiating and responding to price changes. 2 ? Price is 1 factor influencing choice of cellular panies ? Prices in wireless industry dropped 25% in three years ? Few panies were profitable ? mLife ad campaign attempted to build the ATT wireless brand so consumers would consider value rather than just price ? Campaign met with strong initial success mLife: ATT Wireless Case Study 3 Definitions ? MarketSkimming Pricing ? Setting a high price for a new product to skim maximum revenues layer by layer from segments willing to pay the high price. ? MarketPeration Pricing ? Setting a low price for a new product in order to attract a large number of buyers and a large market share. 4 ? Product Line Pricing ? Setting price steps between product line items. ? Price points ? OptionalProduct Pricing ? Pricing optional or accessory products sold with the main product Product Mix Pricing Strategies 5 ? CaptiveProduct Pricing ? Pricing products that must be used with the main product ? High margins are often set for supplies ? Services: twopart pricing strategy ? Fixed fee plus a variable usage rate Product Mix Pricing Strategies 6 ? ByProduct Pricing ? Pricing lowvalue byproducts to get rid of them ? Product Bundle Pricing ? Pricing bundles of products sold together Product Mix Pricing Strategies 7 Price Adjustment Strategies ? Discount / allowance ? Segmented