46 Cards in this Set
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price
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the amount of money charged for a product or service
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customer value-based pricing
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setting price based on buyers' perceptions of value rather than on the seller's cost
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two types of value-based pricing
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good-value pricing and value-added pricing
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good-value pricing
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offering the right combination of quality and good service at a fair price
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high-low pricing
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involves charging higher prices on an everyday basis but running frequent promotions to lower price temporarily on selected items
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value-added pricing
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attaching value-added features and services to differentiate a company's offers while charging higher prices
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cost based pricing
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setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk
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fixed costs (overhead)
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costs that do not vary with production or sales level
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variable costs
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costs that vary directly with the level of production
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total costs
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the sum of the fixed and variable costs for any given level of production
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cost-plus pricing (markup pricing)
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adding a standard markup to the cost of the product
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break-even pricing (target return pricing)
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setting price to break even on the costs of making and marketing a product, or setting price to make a target return
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competition-based pricing
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setting prices based on competitors' strategies, prices, costs, and market offerings
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break-even charts
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shows the total cost and total revenue expected at different sales volume levels
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target costing
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pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met
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pure competition
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the market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities
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monopolistic competition
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market consists of many buyers and sellers who trade over a range of prices rather than a single market price
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oligopolistic compeititon
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market consists of only a few large sellers
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pure monopoly
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market dominated by one seller
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demand curve
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curve that shows the number or units the market will buy in a given time period, at different prices that might be changed
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price elasticity
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a measure of the sensitivity of demand to changes in price
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market-skimming pricing
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setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales
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market-penetration
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setting a low price or a new product to attract a large number of buyers and a large market share
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product line pricing
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setting the price steps between various products in the product line based on cost differences between the products, customer evaluations of different features, and competitors' prces
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optional product pricing
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the pricing of optional or accessory products along with a main product
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captive product pricing
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setting a price for products that must be used along with a main product, such as blades for a razor and fames for a video game console
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two-part pricing
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fixed fee and variable usage rate
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by-product pricing
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setting a price for by-products to make the main product's price more competitive
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product bundle pricing
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combining several products and offering the bundle at a reduced price
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discount and allowances pricing
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reducing prices to reward customer responses such as paying early or promoting the product
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segmented pricing
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adjusting prices to allow for differences in customers, products, or location
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psychological pricing
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adjusting prices for psychological effect
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promotional pricing
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temporarily reducing prices to spur short-run sales
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geographical pricing
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adjusting prices to account for the geographic location of customers
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dynamic pricing
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adjusting prices continually to meet the characteristics and needs of individual customers and situations
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international pricing
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adjusting prices for international markets
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trade-in allowance
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price reductions given for turning in an old item when buying a new one
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promotional allowances
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payments or price reductions that reward dealers for participating in advertising and sales support programs
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reference prices
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prices that buyers carry in their minds and refer to when looking at a given product
cash rebate
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cash rebate
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consumers who buy the product from dealers within a specified time; the manufacturer sends the rebate directly to the customer
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FOB pricing
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goods are placed free on board carrier, customer pays freight from the factory to the destination
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uniform delvered
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opposite of FOB, company charges the same price plus freight to all customers
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zone pricing
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company sets up zones, customers within a given zone pay a single total price; the more distant the zone
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basing point pricing
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seller selects a city as a "basing point" and charges all customers the freight cost from that city to the customer location. regardless of the city from which the goods are actually shipped
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freight-absorption pricing
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seller absorbs all or part of the actual freight charges to get the desired business
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predatory pricing
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selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business
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MKTG 350: Exam 1