Essentials of Marketing Chapter 16 – Pricing Objectives and Policies – Flashcards
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target return objectives
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sets a specific level of profit as an objective
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profit maximization objective
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seeks to get as much profit as possible
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sales-oriented objective
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seeks some level of unit sales, dollar sales, or share of market without referring to profit
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status quo objectives
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don't rock the pricing boat objectives
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nonprice competition
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aggressive action on one or more of the Ps other than price
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administered policies
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consciously set prices instead of letting daily market forces (or auctions) decide their prices, most firms set their own prices
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one-price policy
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means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities
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flexible-price policy
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means offering the same product and quantities to different customers at different prices
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skimming price policy
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tries to sell the top (skim the cream) of the market - the top of the demand curve - at a high price before aiming at more price-sensitive customers
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penetration pricing policy
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tries to sell the whole market at one low price
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introductory price leading
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temporary price cuts to speed new products into a market and get customers to try them
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basic list prices
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the prices final customers or user are normally asked to pay for products
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discounts
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reduction from list price given by a seller to buyers who either give up some marketing function or provide the function themselves
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quantity discounts
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discounts offered to encourage customers to buy in larger amounts
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cumulative quantity discounts
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applies to purchases over a given period such as a year and the discount usually increases as the amount purchased increases
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noncumulative quantity discounts
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discount that applies only to individual orders
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seasonal discounts
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discounts offered to encourage buyers to buy earlier than present demand requires
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net
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means that payment for the face value of the invoice is due immediately
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cash discounts
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reductions in price to encourage buyers to pay their bills quickly
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2/10, net 30
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mans the buyer can take a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days. otherwise, the full face value is due within 30 days
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sale price
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a temporary discount from the list price
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everyday low pricing
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setting a low list price rather than relying on frequent sales, discounts, or allowances
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allowances
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Like discounts, are given to final consumers, customers, or channel members for doing something or accepting less of something
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advertising allowances
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price reductions to firms further along in the channel to encourage them to advertise or otherwise promote the firm's products locally
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stocking allowances
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given to an intermediary to get shelf space for a product
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push money (or prize money) allowances
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PMs or "spiffs" are given to retailer by manufacturers or wholesalers to pass on to the retailers' salesclerk for aggressively selling certain items.
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trade-in allowance
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a price reduction given for used products when similar new products are bought
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rebates
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refunds paid to consumers after a purchase
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F.O.B.
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The abbreviation "F.O.B." stands for "free on board," and means that the buyer pays shipping costs and once the seller puts the goods into the carrier's possession for shipping, the buyer bears the risk of loss.
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zone pricing
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making an average freight charge to all buyers within specific geographic areas
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uniform delivered pricing
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making an average freight charge to all buyers
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freight-absorption pricing
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Absorbing freight cost so that a firm's delivered price meets that of the nearest competitor.
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value pricing
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Setting a fair price level for a marketing mix that really gives the target market superior customer value
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unfair trade practice acts
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Laws that prohibit wholesalers and retailers from selling below cost
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dumping
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Exporting a product at a price below the price it normally sells for in its home market. This is usually done to build market share.
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phony list prices
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Prices customers are shown to suggest that the price has been discounted from the list
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Wheeler Lea Amendment
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law that bans unfair or deceptive acts in commerce
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price fixing
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An agreement among firms to charge one price for the same good
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Robinson-Patman Act
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A 1936 law that makes illegal any price discrimination if it injures competition
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price discrimination
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selling the same products to different customers at different prices
