Chapter 8- Pricing and Credit Strategies – Flashcards
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cost-plus pricing:
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takes the organization's product cost and adds the desired markup.
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elastic demand:
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customer demand moving significantly upward or downward when the price of a product changes.
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follow-the-leader pricing:
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a pricing strategy that is similar to a meet-or-beat- the-competition strategy but uses a particular competitor as the model for pricing.
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inelastic demand:
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the type of demand that does not change in a significant way when prices change.
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installment credit:
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loans to be paid back in installments over time.
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market clearing price:
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the particular price at which the supply of products and/or services matches the demand for them.
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markup pricing:
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a cost-plus pricing strategy in which you apply a predetermined percentage to a product's cost to obtain its selling price.
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merchant card services:
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financial systems to permit acceptance of major credit cards.
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penetration pricing:
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a pricing strategy that uses a low price during the early stages of a product's life cycle to gain market share.skimming price strategy:
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personalized pricing:
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a dynamic pricing strategy in which a company charges a premium above the standard price for a product or service to certain customers who will pay the extra cost.
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pocket price:
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the portion of full price that remains after all pricing factors are deducted.
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prestige pricing:
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the pricing strategy in which a firm sets high prices on its products or services to send a message of uniqueness or premium quality.
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price:
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the amount that a seller requires in exchange for the use of a product or service, or transferring its ownership.
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price lining:
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the process of creating distinctive pricing levels.
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skimming price strategy:
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seeks to charge high prices during the introductory stage of a product when it is novel and has few competitors to take early profits, and then to reduce prices to more competitive levels.
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variable pricing strategy:
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provides different prices for a single product or service.
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Customers frequently judge the quality and value of a product or service based upon its price so it is important to always price your product or service as low as possible.
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False
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Skimming price strategy is the pricing strategy in which a firm sets high prices on their products or services to send a message of uniqueness or premium quality.
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False
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Cost-plus pricing fails to take marketing vision and market conditions into consideration.
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True
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Variable pricing strategy is set so that firms can offer discounts, credit terms, and price concessions.
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True
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Price lining is when you take your cost and add a desired profit margin or "lining."
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False
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Penetration pricing means that you have penetrated the market.
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False
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Keystoning provides the highest cost you should charge for your product or service because it already doubles the price.
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False
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Market clearing prices are the lowest prices at which products or services are sold.
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False
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Which of the following has elastic demand?
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Gas Food Utilities Jewelry Answer: Jewelry
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Monthly statement fees for merchant card services range from:
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$.25 to $.75 per transaction 1 to 6 percent $4 to $20 per month $50 to $200 per month Answer: $4 to $20 per month
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Credit terms of 2/10, net 30 means:
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Make payment within 30 days and you'll receive a 2/10 discount. 2 percent discount is offered for payment within 10 days or full payment within 30 days. Make payment with 2 days and you'll receive a 10% discount for a usual 30-day invoice. Answer: 2 percent discount is offered for payment within 10 days or full payment within 30 days.
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Which of the following would not be included on a credit application?
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Employer identification number (EIN) or Social Security Number DUNS number (from Dun and Bradstreet), if applicable Different promotion methods Ethnic diversity Signature line, giving legal permission to acquire credit information Answer: Ethnic diversity
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Wholesalers often mark up their prices by:
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10% 30% 5% 2% 20% Answer: 20%
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Which of the following is a consumer credit agency?:
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Dun and Bradstreet Experience TransUnion EquiUnion Transfax Answer: TransUnion
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Extending credit to customers has which of the following benefts?
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Increases a firm's revenue Builds customer loyalty Can be used for marketing All of the above None of the above Answer: All of the above
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Personalized pricing is also known as:
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Private pricing Premium pricing Dynamic pricing Luxury pricing Answer: Dynamic pricing
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The distinction between follow-the-leader pricing and meet-or-beat-the competition pricing is:
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Meet-or-beat-the-competition pricing always has a better price than the leader. Follow-the-leader pricing waits to see the pricing of the competitors and meet-or-beat-the-competition sets the price in anticipation of the competitor. Follow-the-leader pricing uses a particular competitor as the model for pricing. Answer: Follow-the-leader pricing uses a particular competitor as the model for pricing.
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By showing that your business is _______________, the less you will have to compete on price.
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the best different the lowest price provider capable Answer: different
