Quick Answer: What Are The Five Product Mix Pricing Situations?

What is product line pricing examples?

Selling a product at or below cost to lure customers in and drive other sales is an example of product-line pricing.

A restaurant, for example, might offer a low-priced entrée with the purchase of a drink and dessert that have higher profit margins..

What is price lining strategy?

The term Price Lining, is used to describe a marketing/ pricing strategy, whereby a business prices its products according to quality, features and attributes in order to differentiate them from similar products. … By doing so the company makes the distinction of quality for customers more visible.

What is product mix strategy?

Product mix, also known as product assortment or product portfolio, refers to the complete set of products and/or services offered by a firm. A product mix consists of product lines, which are associated items that consumers.

What are 2 main sources of new product ideas?

Sources of new product ideas include company employees, customers, competitors, outside inventors, acquisitions, and channel members. Both solicited and spontaneous ideas may emerge from the sources, and some even occur by accident.

What are some risks of adding a new product?

Risks Associated with Product DevelopmentRisk of major delays and economic costs due to belief that high utilization of resources improves performance. … Increasing costs as a result of processing work in large batches. … Risk of losing opportunities by “sticking” to a single development plan. … Risk of starting a product development task too soon.More items…

What are the types of product mix?

The four dimensions to a company’s product mix include width, length, depth and consistency.Width: Number of Product Lines. … Length: Total Products. … Depth: Product Variations. … Consistency is Relationship. … Product Market Mix Strategy.

What are the 3 product mix strategies?

The major alternative product mix strategies (given by William Stanton and others) have been discussed briefly as under:Expansion of Product Mix: … Contraction of Product Mix: … Deepening Product Mix Depth: … Alteration or Changes in Existing Products: … Developing New Uses of Existing Products: … Trading Up: … Trading Down:More items…

What is product line example?

For example, a cosmetic company that’s already selling a high-priced product line of makeup (that might include foundation, eyeliner, mascara, and lipstick) under one of its well-known brands might launch a product line under the same brand name but at a lower price point.

How do companies classify product lines?

Classifying Products. The two broad classifications for products are consumer products and business to business products. These categories represent differences in how consumers and business customers purchase different products, and provide insight for marketing in developing marketing strategies.

What are the 4 types of pricing strategies?

Apart from the four basic pricing strategies — premium, skimming, economy or value and penetration — there can be several other variations on these. A product is the item offered for sale. A product can be a service or an item. It can be physical or in virtual or cyber form.

How companies find a set of prices that maximizes the profits from the total product mix?

How companies find a set of prices that maximizes the profits from the total product mix. strategy sets high initial prices to “skim” revenue layers from the market. … takes into account the cost differences between products in the line, customer evaluations of their features, and competitors’ prices.

How do you calculate product mix?

Actual sales mix percentage: the number of actual units sold of a product divided by total units sold of all products. Budgeted sales mix percentage: the number of budgeted units sold of a product divided by budgeted total units sold of all products.

What companies use captive product pricing?

Captive pricing is often used by companies that have perishable product attachments, like ink for printers. At some point you will use up the initial amount included in the core product, allowing you to buy more of the accessory product (hopefully from the original company).

Why is product mix important?

Your product mix is important in determining the image of your business and brand, as it helps you to maintain consistency in the eyes of your target market. For instance, if you’re a discount retailer, your target market likely consists of economy-minded shoppers looking for low prices.

What is product mix pricing?

Product Mix Pricing Strategies address this issue. … Therefore, the strategy for setting a product’s price often has to be changed when the product is part of a product mix. Then, the company looks for a set of prices that will maximize profits on the total product mix, instead of on the individual product.

What are the three levels of a product?

Three levels of product are involved in any purchase. The levels of product include the core customer value, the actual product and the augmented product.

What is premium pricing example?

Examples of premium pricing ‘Premium unleaded petrol’ Premium unleaded petrol usually retails at 5p a litre more than regular unleaded. The consumer has no real way of testing whether the premium petrol is better, but they might feel that if petrol is more expensive, it must be a better product. Designer clothes.