marketing 2101 chapter 10

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price
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the assignment of value, or the amount the consumer use exchange to receive the offering
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Bitcoin
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the most popular and fastest-growing digital currency
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price elasticity of demand
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the percentage change in unit sales that results from a percentage change in price
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elastic demand
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demand in which changes in price have large effects on the amount demanded
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inelastic demand
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demand in which changes in price have little or no effect on the amount demanded
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cross elasticity of demand
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when changes in the price of one product affect the demand for another item
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variable cost
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the costs of production(raw and processed materials, parts and labor) that are tied to and vary, depending on the number of units produced
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fixed costs
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costs of production that do not change with the number of units produced
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average fixed costs
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the fixed cost per unit produced
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total costs
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the total of the fixed costs and the variable costs for a set number of units produced
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break-even analysis
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a method for determining the number of units that a firm must produce and sell at a given price to cover all its costs
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break-even point
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the point at which the total revenue and total costs are equal and beyond which the company makes a profit, below that point the firm suffers a loss
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contribution per unit
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the difference between the price the firm charger for a product and the variable costs
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markup
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an amount added to the cost of a product to create the price at which a channel member will sell the product
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gross margin
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the markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a product
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retailer margin
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the margin added to the cost of a product by a retailer
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list price
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the price that the manufacturer sets as the appropriate price for the end consumer to pay
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vertical integration
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the combining of manufacturing operations with channels of distribution under a single ownership to reduce costs and increase profits
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cost-plus pricing
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a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling price
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keystoning
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retaining price strategy in which the relater doubles the cost of the item (100 percent markup) to determine the price
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demand-based pricing
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a price setting method based on estimates of demand at different prices
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target costing
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a process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price
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yield management pricing
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a practice of charging different prices to different customers to management capacity while maximizing revenues
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price leadership
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a pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or similar prices
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high/low pricing
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a retail pricing strategy in which the retailer prices merchandise at list price but runs frequent, often weekly, promotions that heavily discount some products
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skimming price
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a very high, premium price that a firm charges for its new, highly desirable product
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penetration pricing
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a pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it
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trial pricing
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pricing a new product low for limited period of time to lower the risk for a customer
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price segmentation
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the practice of charging different prices to different market segments for the same product
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surge pricing
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a pricing plan that raises prices of a product as demand goes up and lowers it as demand slides
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bottom of the pyramid pricing
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innovative pricing that will appeal to consumers with the lowest incomes by brands that wish to get a foothold in bottom of the pyramid countries
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two-part pricing
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pricing that requires two separate types of payments to purchase this product
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payment pricing
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a pricing tactic that breaks up the total price into smaller amounts payable over time
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decoy pricing
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a pricing strategy where a seller offers at least three similar products, two have comparable but more expensive prices and one of these two is less attractive to buyers, thus causing more buyers to buy the higher priced more attractive item
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price bundling
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selling two or more goods or services as as single package for one price
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captive pricing
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a pricing tactic for two items that must be used together; one item in priced very low and the firm makes it profit on the other,, high-margin item essential to the cooperation of the first item
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FOB delivered pricing
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a pricing tactic in which the cost of loading and transpiring the product to the customer is included in the selling price and is paid by the manufacturer
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uniform delivered pricing
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a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of the location
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freight absorption pricing
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a pricing tactic in which the seller absorbs the total cost of transportation
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trade discounts
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discounts off list price of products to members of the channel of distribution who perform various marketing functions
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cash discounts
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a discount offered to a customer to entice them to pay their bill quickly
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seasonal discounts
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price reductions offered only during certain times of the year
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dynamic pricing
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a pricing strategy in which the price can easily be adjusted to meet changes in the marketplace
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online auctions
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e-commerce that allows shoppers to purchase products through online bidding
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freemium pricing
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a business strategy in which a product in its most basic version is provided free of charge but the company charges money for upgraded versions of the product with more features, greater functionality
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price lining
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the practice of setting a limited number of different specific prices called price points for items in a product line
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prestige pricing
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a pricing strategy used by luxury goods marketers in which they keep the price artificially high to maintain a favorable image of the product
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bait and switch
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an illegal marketing practice in which an advertised price special is used as bait to get customers into the store with the intention of switching them to a higher priced item
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price fixing
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the collaboration of two or more firms in setting prices usually to keep prices high
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Which of the following refers to a deceptive pricing tactic in which an advertised price special is used as bait to get customers into the store with the intention of selling them a​ higher-priced item?
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bait and switch
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​_____ means selling two or more goods or services as a single package for one pricelong dash—a price that is often less than the total price of the items if bought individually.
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price bundling
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Which of the following refers to the assignment of​ value, or the amount the consumer must exchange to receive the offering or​ product?
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price
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Which of the following refers to the percentage of a​ market, defined in terms of either sales units or​ revenue, accounted for by a specific​ firm, product​ lines, or​ brands?
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market share
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In which step of the price planning process does a firm analyze the​ economy, competition, government​ regulations, consumer​ trends, and the internal​ environment?
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step 4
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Which of the following refers to the most popular and fastest growing digital​ currency?
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bitcoin
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​_____ pricing means that the firm charges a​ high, premium price for its new product with the intention of reducing it in the future in response to market pressures.
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skimming
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Which of the following refers to demand in which changes in price have large effects on the amount​ demanded?
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elastic demand
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Which of the following refers to the costs of production that do not change with the number of units​ produced?
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fixed cost
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Which of the following pricing strategies would be used if a firm bases the selling price on an estimate of volume or quantity that it can sell in different markets at different​ prices?
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demand based pricing
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Which of the following pricing strategies is usually the rule in an oligopolistic industry that a few firms​ dominate, which might be in the best interest of all players because it minimizes price​ competition?
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price leadership
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Which of the following refers to a pricing strategy in which the price can easily be adjusted to meet changes in the​ marketplace?
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dynamic pricing
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Assume that for a given​ product, the total fixed costs are​ $100,000 and the contribution per unit to fixed costs is​ $50. What is the​ break-even point expressed in the number of​ units?
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2000
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Which of the following refers to the costs of production that fluctuate depending on the number of units​ produced?
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variable cost
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Marketers often apply their understanding of the psychological aspects of pricing in a practice they call​ ________, whereby items in a product line sell at different​ prices, or price points.
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price lining
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A Rolex​ watch, a Louis Vuitton​ handbag, and a Rolls Royce automobile are all examples of​ _____ products.
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prestige
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Which of the following pricing tactics is used when price reductions are offered only during a certain time of the​ year?
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seasonal discounts
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Which of the following pricing strategies is heavily used by hospitality companies like​ airlines, hotels, and cruise lines because these businesses charge different prices to different customers in order to manage capacity while they maximize​ revenues?
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yield management pricing
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If you see a loaf of bread that is priced at​ $14.99, your past experience tells you that that price is substantially higher than a normal loaf of bread would be. If you feel that a loaf of bread should be less than​ $2.00, then this is your​ _____ price.
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internal reference
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Which of the following refers to an online strategy in which the price can easily be adjusted to meet changes in the​ marketplace?
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internet price discrimination
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Which of the following refers to an amount added to the cost of a product to create the price at which a channel member will sell the​ product?
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markup
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Which of the following is a business strategy in which a product in its most basic version is provided free of charge but the company charges money for upgraded versions of the product with more​ features, greater​ functionality, or greater​ capacity?
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freemium pricing
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​eBay, eCrater,​ Bonanzle, eBid, and CQou all utilize which of the following models to allow shoppers to bid on everything from bobbleheads to​ health-and-fitness equipment to a Sammy Sosa​ home-run ball?
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online auctions
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Which of the following occurs when two or more companies conspire to keep prices at a certain​ level?
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price fixing
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When retailers advertise products at very low prices or even below cost in the hopes that customers will purchase other items at regular​ prices, they are engaging in​ _____.
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loss leader pricing

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