Luxury Marketing Vocabulary Terms – Flashcards
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What is Luxury?
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high quality, sophisticated, expensive, exclusive, scarce, brand
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Craftsmanship
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culturally made products, ex: saki
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Workmanship
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making a product
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Traceability
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the ability to trace where your product comes from
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Cucooning
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preferring to stay home instead of going out, being able to have time to be at home and be still
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Pre-historic Definition of Luxury
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Those who had food and those who didn't
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Antiquity Definition of Luxury
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romans and their luxury feasts and festivals, focus on the sheer quantity of what you have
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Middle Ages Definition of Luxury
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clergy and their luxurious churches, castles and white knights, princes, kings, crown jewels
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Renaissance Definition of Luxury
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where it really began, aristocracy, arts and culture, rare and precious items
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Beginning of the Modern Age Definition of Luxury
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in France the "bourgeoisie", a large social class with money, nobles and noble products, a touch less expensive than royal items
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Bernard Arnault
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CEO of LVMH
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Producer Culture
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product orientation, quality based, "I will make this and they will buy it," industrial revolution, cannot react well to market changes
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Consumer Culture
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market orientation, "what do you want? I will make it for you," agile and reacts quickly to changes in the market, ex: Mountain Dew elections
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Veblen Goods
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the more expensive the goods are, the more people want them
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Conspicuous Consumption
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buying to show off to others
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Snob Goods
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use your good in order to differentiate yourself, "I like Chanel because everyone else likes Louis Vuitton."
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Bandwagon Goods
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preference for a good increases as the number of people buying them increases
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Halo Effect
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when you don't know about the product but one feature acts as a "halo" to make it seem good, ex: wine "from France"
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Summary Effect
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when you are an expert and you can look at a few details of a product and deduce way more than what is explicitly said
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Brand Assets
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brand loyalty, quality perceptions, brand awareness, repeat buying
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Aspirational Brands
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Gucci, Louis Vuitton, looking to buy into the culture/lifestyles that these brands represent
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Accessible Brands
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Coach, Ralph Lauren, categorized by affordability, status, and membership, these brands are directly affected by the global economy
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Absolute Brands
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Hermes, Rolex, elitism and brand recognition, there will always be rich people to buy these
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Economic Definition of a Luxury Brand
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considered higher priced than alternatives even though they serve the same purpose
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Marketing Definition of a Luxury Brand
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deliver added emotional benefits unmatched by cheaper, comparable brands
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Causal Ambiguity
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"we don't know why it happens, it just does"
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Brand Equity
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= (assets) - (liability)
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Luxury Trends
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1 - Timeless Quality (museum, tours, movies) 2 - Security and Safety (facts, demonstrations) 3 - Emotional Branding (commercials, live experiences) 4 - Good Karma (doing something good) 5 - Seize the Day (exclusive offers) 6 - Regionalism (reenactments) 7 - Food and Health (samples) 8 - Individual Editions (exclusive offers)
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6 Pillars of Luxury
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1 - Real vs Imaginary 2 - Material vs Symbolic 3 - Social vs Self 4 - Desire vs Satisfaction 5 - Rationality vs Irrationality 6 - Materialism vs Spirituality
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1 - Real vs Imaginary
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consumption is imaginary but can have real implications on the self
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2 - Material vs Symbolic
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luxury products are not things we need but represent some symbol
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3 - Social vs Self
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you show something to others but you also have higher perceptions of yourself
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4 - Desire vs Satisfaction
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when we buy we have a desire for something, but we seek to attain more than we desire
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5 - Rationality vs Irrationality
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if we were rational consumers than luxury would not exist
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6 - Materialism vs Spirituality
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we can have so many things, but when we have so much is it really satisfying? Or do we require something more in depth than that?
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Psychographics
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values, attitudes, lifestyles
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Segmentation
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identify bases for segmenting the market (geographic, demographic, psychographic, socio-demographic, and behavioral)
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Geographical Segmentation
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segmenting the market into physical areas, ex: Asia vs Europe
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Demographic Segmentation
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most popular base for segmenting consumer markets, general descriptors of the consumer, ex: income level, man, woman, etc
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Psychographic Segmentation
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segmenting the market based on lifestyles, social class, and personality traits (ex: seeking authenticity, creativity seekers, timelessness and prestige seekers, and those that seek icons and badges)
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Behavioral Segmentation
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segmenting the market based on behavior trends, occasions, benefits sought, user status, usage rate, loyalty status, etc
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Socio-demographic Segmentation
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segmenting the market into high net worth individuals (HNWI), more than $1 million in personal assets, etc
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Day-Trippers
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occasional luxury buyers, accessories and brand extensions, some money but not much, account for most luxury purchases
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Products vs Logos
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product is appealing because it is a small masterpiece (Aston Martin, Hermes) product is appealing because of the emblems (Louis Vuitton)
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Authenticity vs History
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authenticity compresses time and is long term history means respect for the tradition
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Individual vs Integrate
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individual is to be different integrate is to be discrete, fading into the universe of luxury
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3 Levels of the Product
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Core Product = the benefit the good gives to you Actual Product = quality, color, fashion, branding, style, etc Augmented Product = warranties, services, delivery, customer care, finance, installation
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Feature Fatigue
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when you don't know what 90% of the buttons on your remote do, consumers "tune out" when there are too many features
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Primary Packaging
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the bottle that wine comes in
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Secondary Packaging
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the box that the bottle of wine comes in
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Shipping Packaging
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the box with styrofoam that protects the whole product (box and bottle)
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Brand
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a name, term, sign, symbol, or design that represents your product
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Line Extension
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minor changes to existing products, a company uses an existing brand name to launch a new product in the same category (ex: Opium launches "Black" Opium)
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Brand Extension
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brand name helps to introduce new products, a company uses an existing brand name to enter a new product design or category (ex: Apple computers and Apple phones)
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Multibrands
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multiple product entries into the same product category
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Product Line
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a group of products that are closely related because of similar functions, customer groups, marketing outlets, and/or given price ranges
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Line Stretching
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adding products that are higher or lower priced than the existing line (ex: you have eau de parfum at $30, and you add parfum at $45, and eau de toilette at $20)
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Line Filling
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adding more items within the present price range (ex: you have vanilla soap at $4, then you add strawberry at $4)
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Product Line Enlargement
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trading up and down within the brand
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Product Line Completion
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adding more products/articles to the line
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Product Line Innovation
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add new and remove obsolete (ex: fashion winter lines to spring lines)
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Services
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either a part of the product or the full product that the consumer is willing to buy, intangible, no ownership, may or may not be attached to a physical product
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Servicescape
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where the service actually occurs
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Substitutability (when it comes to services)
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you can always just do it yourself
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Postponability (when it comes to services)
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you can always stall or put off the service to a later time
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Place Marketing
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sell a geographic area, ex: houses, buildings, vacation locations
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Organization Marketing
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PR perform image assessment and shift image towards the goal
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Person Marketing
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create, maintain, and alter attitudes to a person, similar to organization but more dramatic life-cycles, ex: celebrity and sports agents
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Distribution Channels
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the path products take from producers to consumers
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Intensive Distribution
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firm's products are everywhere, every available outlet has them, many intermediaries are used
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Selective Distribution
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limited number of retailers (ex: only Monoprix)
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Exclusive Distribution
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only available in a specific geographic location (ex: Paris)
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Licensing
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to give someone else who is better at marketing the rights to your brand/product to manage the brand's image for you
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Retail
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distribution channel member that sells goods and services for individual use
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Direct-Response Retailing
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sales through catalogs/telemarketers
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Internet Retailing
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virtual store fronts
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Direct Selling
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person to person selling (ex: Mary Kay)
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Automatic Merchandising
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sales through vending machines
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5 Stages of becoming a Luxury Market
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1 - Subjugation 2 - Start of money 3 - Show off 4 - Fit In 5 - Way of Life
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FMCG
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Fast Moving Consumer Goods (speaks for itself)
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Maslow's Hierarchy
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Physiological (bottom) Security Belonging Recognition Accomplishment (top)
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B2C Marketing
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"business to consumer" marketing of demand, motivated by need and usage, marketed to nationals and locals, short recurring product cycle
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Luxury Marketing
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marketing of the offer, motivated by desire and status, marketed to internationals, long purchase cycle
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Price
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what you pay for something, sum of the values consumers exchange for the product or service (time, cognitive, and emotional costs)
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Mecenat
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sponsorship
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Cost Based Pricing
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product -> cost -> price -> value -> customers
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Value Based Pricing
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customers -> value -> price -> cost -> product
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Price Ceiling
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there is no demand above a certain price (maximum accepted price)
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Price Floor
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there are no profits below a certain price (minimum accepted price)
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Market Skimming
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high priced product with low volumes of quantity, skim the profit from the market, short lifecycle products
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Psychological Pricing
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Play on consumer's perceptions, $9.99 vs $10, used to set high prices even if the product is inexpensive to make
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Fixing Prices
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when i fix my price, i look at what the client is willing to pay and that it is not a ridiculous price
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When to Cut Prices
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when there is excess capacity, falling market share due to price competition, and/or the desire to be the market share leader
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When to Increase Prices
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to increase profit margin, when the product faces cost inflation, and/or there is a greater demand than can be supplied
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Phantom Effect
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when there is a general assumption that there should be or that there are advertisements where there actually are none. ex: "Do you recall seeing this ad?" Yes "Where?" On TV "There was no ad on TV"
