marketing 2101 chapter 10 – Flashcards
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the assignment of value, or the amount the consumer use exchange to receive the offering
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price
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the most popular and fastest-growing digital currency
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Bitcoin
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the percentage change in unit sales that results from a percentage change in price
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price elasticity of demand
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demand in which changes in price have large effects on the amount demanded
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elastic demand
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demand in which changes in price have little or no effect on the amount demanded
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inelastic demand
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when changes in the price of one product affect the demand for another item
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cross elasticity of demand
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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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variable cost
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costs of production that do not change with the number of units produced
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fixed costs
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the fixed cost per unit produced
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average fixed 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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total costs
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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 analysis
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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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break-even point
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the difference between the price the firm charger for a product and the variable costs
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contribution per unit
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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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markup
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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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gross margin
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the margin added to the cost of a product by a retailer
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retailer margin
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the price that the manufacturer sets as the appropriate price for the end consumer to pay
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list price
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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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vertical integration
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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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cost-plus pricing
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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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keystoning
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a price setting method based on estimates of demand at different prices
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demand-based pricing
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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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target costing
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a practice of charging different prices to different customers to management capacity while maximizing revenues
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yield management pricing
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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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price leadership
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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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high/low pricing
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a very high, premium price that a firm charges for its new, highly desirable product
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skimming price
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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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penetration 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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trial pricing
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the practice of charging different prices to different market segments for the same product
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price segmentation
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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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surge 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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bottom of the pyramid pricing
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pricing that requires two separate types of payments to purchase this product
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two-part pricing
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a pricing tactic that breaks up the total price into smaller amounts payable over time
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payment 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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decoy pricing
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selling two or more goods or services as as single package for one price
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price bundling
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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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captive 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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FOB 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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uniform delivered pricing
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a pricing tactic in which the seller absorbs the total cost of transportation
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freight absorption pricing
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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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trade discounts
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a discount offered to a customer to entice them to pay their bill quickly
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cash discounts
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price reductions offered only during certain times of the year
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seasonal discounts
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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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dynamic pricing
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e-commerce that allows shoppers to purchase products through online bidding
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online auctions
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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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freemium pricing
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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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price lining
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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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prestige pricing
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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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bait and switch
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the collaboration of two or more firms in setting prices usually to keep prices high
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price fixing
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bait and switch
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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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price bundling
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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
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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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market share
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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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step 4
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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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bitcoin
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Which of the following refers to the most popular and fastest growing digital currency?
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skimming
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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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elastic demand
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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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fixed cost
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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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demand based pricing
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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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price leadership
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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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dynamic pricing
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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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2000
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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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variable cost
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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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price lining
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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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prestige
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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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seasonal discounts
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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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yield management pricing
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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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internal reference
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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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internet price discrimination
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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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markup
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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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freemium pricing
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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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online auctions
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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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price fixing
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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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loss leader pricing
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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 _____.
