MKT 369 ch.15 – Flashcards
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Price Discrimination
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Occurs when a retailer charges different prices for identical products and/or services sold to different customers
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Predatory Pricing
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Arises when a dominant retailer sets prices below its costs to drive competitive retailers out of business
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Horizontal Price Fixing
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Involves agreements between retailers that are in direct competition with each other to set the same prices
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Bait-and-switch
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Unlawful, deceptive practice that lures customers into a store by advertising a product at a lower-than-normal price and then induces them to purchase a higher-price model
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Markup
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the difference between the retail price and the cost of an item
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Markup percentage
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Markup as a percentage of the retail price
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Reductions
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Factors that reduce the actual selling price from the initial sales price
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Initial Markup
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Retail selling price initially set for the merchandise, minus the cost of the merchandise
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Maintained Markup
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Actual sales realized for the merchandise, minus its costs
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Merchandising Optimization Software
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set of algorithms that monitors merchandise sales, promotions, competitors' actions, and other factors to determine the optimal price and timing for merchandising activities, especially markdowns
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Break-even analysis
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determines, on the basis of a consideration of fixed and variable costs, how much merchandise needs to be sold to achieve a break even profit
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Break even point quantity
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the quantity at which total revenue equals total cost, and then profit occurs for additional sales
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Fixed costs
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costs that are stable and don't change with the quantity of product produced and sold
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variable cost
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retailer's expenses that vary directly with the quantity of product produced and sold
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Markdowns
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price reductions or discounts from the initial retail price
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First-degree price discrimination
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charging each individual customer a different price based on their willingness to pay
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Second-degree price discrimination
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offer the same multiple price schedule to all customers but require that customers do something to get the lower price
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Coupons
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offer a discount on the price of specific items when they're purchased
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Rebates
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Provide another form of discounts for consumers off the final selling price
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Price bundling
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practice of offering two or more different products or services for sale at one price
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Multiple-unit pricing/quantity discounts
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Practice of offering two or more similar products or services for sale at one lower total price
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Third-degree Price Discrimination
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Charging different prices to different demographic market segments
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Zone Pricing
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Refers to the practice of charging different prices in different stores, markets, regions, or zones
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High/low pricing
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discount the initial prices for merchandise through frequent sales promotions
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Everyday low pricing (EDLP)
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Emphasizes the continuity of retail prices at a level somewhere between the regular nonsale price and the deep-discount sale price of high/low retailers
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Low Price Guarantee Policy
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Guarantees customers thy will have the lowest price in a market for products they sell
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Rain Checks
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Written promises given to customers when merchandise is out of stock to sell customers that merchandise at the sale price when the merchandise arives
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Yield Management
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Practice of adjusting prices up or down in response to demand to control the sales generated
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Leader Pricing
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Involves a retailer pricing certain items lower than normal to increase customers' traffic flow or boost sales of complementary products
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Price Lining
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Offering a limited number of predetermined price points within a merchandise category
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Cherry Pickers
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people who go from one store to another, buying only items that are on special
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Odd Pricing
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The practice of using a price that ends in an odd number, typically a 9
