is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination.
The Robinson-Patman Act is an amendment to the 1914 Clayton Antitrust Act and is supposed to prevent "unfair" competition.
Price discrimination is illegal if it's done on the basis of race, religion, nationality, or gender, or if it is in violation of antitrust or price-fixing laws.
Standard worldwide price is possible if foreign marketing costs are low and do not affect overall costs; Dual pricing establishes separate domestic and export price strategies; Market-differentiated pricing allows companies to price products according to marketplace conditions.
EXAMPLES
Skimming - IPOD; Penetration - Emachines computers; Competitive - cell phone sales
1. Cost:
While fixing the prices of a product, the firm should consider the cost involved in producing the product. This cost includes both the variable and fixed costs. Thus, while fixing the prices, the firm must be able to recover both the variable and fixed costs.
2. The predetermined objectives:
While fixing the prices of the product, the marketer should consider the objectives of the firm. For instance, if the objective of a firm is to increase return on investment, then it may charge a higher price, and if the objective is to capture a large market share, then it may charge a lower price.
3. Image of the firm:
The price of the product may also be determined on the basis of the image of the firm in the market. For instance, HUL and Procter & Gamble can demand a higher price for their brands, as they enjoy goodwill in the market.
4. Product life cycle:
The stage at which the product is in its product life cycle also affects its price. For instance, during the introductory stage the firm may charge lower price to attract the customers, and during the growth stage, a firm may increase the price.
5. Credit period offered:
The pricing of the product is also affected by the credit period offered by the company. Longer the credit period, higher may be the price, and shorter the credit period, lower may be the price of the product.
6. Promotional activity:
The promotional activity undertaken by the firm also determines the price. If the firm incurs heavy advertising and sales promotion costs, then the pricing of the product shall be kept high in order to recover the cost.
Fair-trade laws protect businesses and governments from companies or countries attempting to dump goods into a marketplace at low prices or with unfair subsidies. Initially, fair trade was primarily a domestic issue; after World War II, fair-trade laws developed into a key tenet of international trade relations.
The U.S. and other governments provide financial assistance, or subsidies, to companies to aid in the production, manufacture, or exportation of goods. Subsidies run the gamut from cash payments to companies to loans granted at below market rates to stimulate sales in other countries. When governments determine that an unfair subsidy has been granted, they can offset the subsidy through higher import duties, thus keeping competition open between foreign and domestic companies.
Answer: was a statute in any of various states of the United States that permitted manufacturers the right to specify the minimum retail price of a commodity, a practice known as "price maintenance". Such laws first appeared in 1931 during the Great Depression in the state of California.
Such laws first appeared in 1931 during the Great Depression in the state of California. They were ostensibly intended to protect small businesses to some degree from competition from very large chain stores during a time when small businesses were suffering. Many people objected to this on the grounds that if the manufacturers could set the price, consumers would have to pay more even at large discount stores. The complexity of the market also made the enforcement of these laws almost impractical. As the chain stores became more popular, and bargain prices more common, there was a widespread repeal of the laws in many jurisdictions. By 1975, the laws had been repealed completely.
Answer: In a bundle pricing, companies sell a package or set of goods or services for a lower price than they would charge if the customer bought all of them separately. Common examples include option packages on new cars, value meals at restaurants and cable TV channel plans. Pursuing a bundle pricing strategy allows you to increase your profit by giving customers a discount.
a. Skimming
Small business owners price their goods and services using strategies that fit their target markets' budgets. Price skimming is a type of strategy that businesses use when they are first to enter the market with a product or service. With price skimming, when a product is released, it's offered at high price and then lowered later in the product's life cycle or when competition begins to enter the market.
b. Penetration
Penetration pricing is the practice of setting an initial price much lower than the eventual standard price. "A penetration strategy is the price war; this strategy goes for the deepest price cuts driving at every moment to have your price be the lowest on the market," reports Joern Meissner, of Meissner Research Group, a Lecturer in Management Science at the Lancaster University Management School. Customers who are looking for the best bargain will switch their loyalty to you if you can entice them with the lowest prices. This strategy works best during a product's growth phase, since the product already has a positive reputation.
Penetration pricing can bring new customers into your store, increasing market share and building customer loyalty. However, when implemented incorrectly, it may cause you to lose money and may increase competition rather than decrease it. To price products most effectively, consider your cost/profit objectives, customers, the product's life cycle and your competition.
Use penetration pricing only if you need an exceptionally low price to drawn attention from customers or to scare away competitors. You will have the most success when the given product is mass-produced since the cost per unit is usually lower. Your business must be able to absorb any loss incurred when you slash prices, so make sure you have enough reserve funds to keep the business afloat.
c. Competitive
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What is 'Competitive Pricing'
Competitive pricing is setting the price of a product or service based on what the competition is charging. Competitive pricing is used more often by businesses selling similar products, since services can vary from business to business while the attributes of a product remain similar. This type of pricing strategy is generally used once a price for a product or service has reached a level of equilibrium, which often occurs when a product has been on the market for a long time and there are many substitutes for the product.
Answer: For most products the relationship between price and quality was weak. Hypotheses were developed and tested to explain the variation of price-quality correlations across products. Further, price-quality correlations were found to be lower when the inflation rate was relatively high. It was concluded that, in general, price appears to be a poor market signal of quality.
Survival
Prices are flexible. A company can lower them in order to increase sales enough to keep the business going. The company uses a survival-based price objective when it's willing to accept short-term losses for the sake of long-term viability.
Profit
Price has both direct and indirect effects on profit. The direct effect relates to whether the price covers the cost of producing the product. Price affects profit indirectly by influencing how many units sell. The number of products sold also influences profit through economies of scale -- the relative benefit of selling more units. The primary profit-based objective of pricing is to maximize price for long-term profitability.
Sales
Sales-oriented pricing objectives seek to boost volume or market share. A volume increase is measured against a company's own sales across specific time periods. A company's market share measures its sales against the sales of other companies in the industry. Volume and market share are independent of each other, as a change in one doesn't necessarily spur a change in the other.
Status Quo
A status quo price objective is a tactical goal that encourages competition on factors other than price. It focuses on maintaining market share, for example, but not increasing it, or matching a competitor's price rather than beating it. Status quo pricing can have a stabilizing effect on demand for a company's products.