MKT 300 1nd Edition Lecture 24 Outline of Last Lecture XLII Chapter 16 Terms part 1 XLIII Chapter 16 Concepts to Apply part 1 Outline of Current Lecture XLIV Chapter 16 Terms part 2 XLV Chapter 16 Concepts to Apply part 2 Current Lecture XLIV Chapter 16 Terms part 2 Everyday Low Pricing setting a low price rather than relying on frequent sales discounts or allowances Some supermarkets Allowances like discounts are given to final consumers business customers or channel members for doing something or accepting less of something Advertising Allowances price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier s products locally Stocking Allowances slotting allowances given to an intermediary to get shelf space for a product Mainly used to get supermarket chains to handle new products Push Money or Price Money Allowances sometimes called PMs or spiffs Given to retailers by manufacturers or wholesalers to pass on to the retailer s salesclerks for aggressively selling certain items They are used for new items slower moving items or higher margin items I e furniture clothing consumer electronics and cosmetics Trade in Allowances a price reduction given for used products when similar new products are bought Give the marketing manager an easy way to lower the effective price without reducing list price Rebates refunds paid to consumers after a purchase F O B free on board some vehicle at some place The sellers pays the cost of loadig the products onto some vehicle then title the products passes to the buyer The buyer pays the freight and take responsibility for damage in transit These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Freight Absorption Pricing absorbing freight cost so that a firm s delivered price meets that of the nearest competitor Amounts to cutting list price to appeal to new market segments Value Pricing setting a fair price level for a marketing mix that really gives the target market superior customer value The focus is on the customer s requirements and how the whole marketing mix meets those needs Unfair Trade Practice Acts put a lower limit on prices especially at the wholesale and retail levels The practical effect of these laws is to protect certain limited line food retailers such as dairy stores from the kind of ruinous competition supermarkets might offer if they sold milk as a leader offering it below cost for a long time Dumping pricing a product sold in a foreign market below the cost of producing it or at the price lower than in its domestic market Phony List Prices prices customers are shown to suggest that the price has been discount from list Wheeler Lea Amendment bans unfair or deceptive acts in commerce Price Fixing competitors getting together to raise lower or stabilize prices Common and relatively easy But it is also completely illegal in the United States Robinson Patman Act makes illegal any price discrimination Price Discrimination selling the same products to different buyers at different prices if it injures competition XLV Chapter 16 Concepts to Apply part 2 6 What is the difference between a coupon and a rebate What are the advantages and disadvantages of each a A coupon offers a discount so the customer pays less for the product A rebate situation has the customer pay the same price but they are given some money back later 7 How can shipping costs affect pricing When should the customer pay freight and when should the mfr pay freight a When it is freight absorption seller pays freight the seller may make the product more expensive to account for it b F O B customer pays c Zone average freight charge to all buyers w in specific geographic area d Uniform delivered the same average freight charge to buyers 8 What advantage does value based pricing provide that cost based pricing does not a You can get more profit if your product has more value than what it cost to make 9 What are illegal pricing tactics Can you legally charge different prices to different customers If so under what circumstances can you do this What legislation regulates price discrimination a You can if you fit the at least one of following criteria outline by the Robertson Patman Act Not of like grade quality Cost differences Meeting competition b This applies to channel or other businesses not to the end consumer then I m pretty sure you can do whatever you want