Proc 5830

Topics: Pricing, Price, Marketing Pages: 16 (3108 words) Published: April 10, 2013
PROC 5830 –Mid Term-Exam

1) Define the five key elements of a pricing strategy.
Value Creation- Value for customers is a critical task for marketers, especially when developing

new products and or a service. Marketers explore ways to distinguish themselves, in the eyes of

the customer, from others in the marketplace designing strategy, recognizing new product

opportunities. As a customer looking in the customer value is what they get (benefits) relative

to what they have to give up costs or sacrifices.

Price & Offer Structure- A price structure is a segment set at various stages for pricing to

maximize revenue to companies while offering various pricing to customers with different wants

and needs. This structure is to retain and attract new customers by offering prices the believes

they can afford to the needs of the services wanted.

Price & Value Communication- A price is placed on all products and communicated to

customers expressing the importance of obtaining this product via comparison and or need

because of the ever changing world. The marketer wants to put heavy emphasis on the value and

need of the product trying to hit home with the customer without bringing up the price unless it


Pricing Policy- Marketers procedures used to set prices with the intent to gain customers trust that the price before them is a good price in which they are willing to pay for a product. The company must optimize the possibility too make a profit by examining what is being offered throughout the market keeping in mind the customer’s specific needs by reviewing the market segments, the products availability and what competition is out in the market for same or similar product.

Price Setting- Marketers set and maintain specified prices on typically competing products by either impeding on the competition by offering same or like product at a cheaper cost with the hope to gain more revenue by stealing customers from the competitor or cutting prices due to the need or variations of the economy.

2) Name and describe the 6 steps for value based segmentation.

Determine Basic Segmentation Criteria – Is dividing your customers up in subgroups to try

and maximize their need for a product showing how beneficial the product can be to a customer

through careful research of similar or like products, knowing where the differences may lie in the

segments this is done through research finding out about all the demographics in a sub-group.

Identify discriminating value Drivers – Drivers are meant to create positive perception of a

product giving a competitive advantage in the form of a satisfied customer, great recognition of a

product or pure innovation. These drivers may be geared towards one subgroup and not

appealing to other subgroups, these drivers add value to your product so it is imperative that the

product is not only going vertical but horizontal as well reaching to as many customer to

recognize its worth.   

Determine Your Operational Constraints & Advantages – know your company’s ability,

and what limits your company is bound by, decide what you do better than the competition so

the consumer will be able to recognize and benefit from purchasing the product. Determine if it

is more beneficial to offer packages or sell items independently this should be determined by the

customers need. Understand the services that the company is offering and a decision should be

made to which products can add value to customer if they purchased and price them as such. All

these contribute to what you can and cannot do if you as the marketer know the ability of your


Create Primary and Secondary Segments – While creating segments you must be careful

when pointing out the company’s ability and the customers desires by placing groups in primary

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