marketing chapter 20&21 – Flashcards
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that which is given up in an exchange to acquire a good or service
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price
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the price charged to customers multiplied the number of units sold
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revenue
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revenue minus expenses
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profit
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net profit after taxes divided by total assets
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revenue on investment
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a company's product sales as a percentage of total sales for that industry
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market share
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a pricing objective that maintains existing prices or meets the competition's prices
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status quo pricing
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the quantity of a product that will be sold in the market at various prices for a specified period
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demand
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the quantity of a product that will be offered to the market by a supplier at various prices for a specified period
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supply
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price at which demand and supply are equal
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price equilibrium
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consumer's responsiveness or sensitivity to changes in price
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elasticity of demand
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situation in which consumer demand is sensitive to changes in price
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elastic demand
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situation in which an increase or a decrease in price will not significantly affect demand for the product
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inelastic demand
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a situation in which total revenue remains the same when prices change
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unitary elasticity
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a strategy whereby prices are adjusted over time to maximize a company's revenues
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dynamic pricing
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technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity by discounting early purchases, limiting early sales at these discounted prices, and overbooking capacity
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yield management system
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a cost that varies with changes in level of output
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variable cost
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cost that does not change as output is increased or decreased
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fixed cost
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total variable costs divided by quantity of output
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average variable cost
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total costs divided by quantity of output
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average total cost
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total fixed costs divided by quantity of output
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average fixed cost
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the change in total costs associated with a one unit change in output
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marginal cost
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cost of buying the product from the producer, plus amounts rom profit and for expenses not otherwise accounted for
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markup pricing
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practice of marketing up prices by 100 percent, or doubling the cost
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keystoning
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a method of setting prices that occurs when marginal revenue equals marginal cost
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profit maximization
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the extra revenue associated with selling an extra unit of output or the change in total revenue with a one-unit change in output
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marginal revenue
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a method of determining what sales volume must be reached before total revenue equals total cost
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break even analysis
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stocking well known branded items at high prices to sell more brands at discounted prices
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selling against the brand
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private electronic network that links a company with its suppliers and customers
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extranet
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charging a high price to help promote a high quality image
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prestige pricing
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long term pricing framework that establishes the initial price for a product and the intended direction for the price
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price strategy
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pricing policy whereby a firm charges a high introductory price
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price skimming
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pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out
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penetration pricing
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agreement between two or more firms on the price they will charge for a product
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price fixing
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practice of charging a very low price for a product with the intent of driving competitors out of business
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predatory pricing
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general price level at which the company expects to sell the good or service
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base price
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a price reduction offered to buyers buying in multiple units or above a specified dollar amount
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quantity discount
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deduction from list price that applies to the buyer's total purchases made during a specific period
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cumulative quantity discount
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deduction from list price that applies to single order
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noncumulative quantity discount
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price reduction offered in return for prompt payment of a bill
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cash discount
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a discount to wholesalers and retailers for performing channel functions
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functional discount
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price reduction for buying merchandise out of season
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seasonal discount
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payment to a detailer for promoting the manufacturer's product
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promotional allowance
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cash refund given for the purchase of a product during a specific period
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rebate
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setting the price at a level that seems to the customer to be a good price compared to the prices of other options
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value based pricing
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price tactic that requires buyer to absorb freight costs
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FOB origin pricing
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pricing tactic in which seller pays the actual freight chargers and bills every purchases a flat charge
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uniform delivered pricing
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modification of uniform delivered pricing that divided US into segments and charges flat fee for zones
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zone pricing
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price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer
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freight absorption pricing
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price tactic that charges freight from a given point regardless of the city from which the goods are shipped
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basing point pricing
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price tactic that offers all goods and services the same price
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single price tactic
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price tactic in which customers pay different prices for essentially the same merchandise bought in equal quantities
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flexible pricing
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practice of offering a product line with several items at specific price points
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price lining
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price tactic in which a product is sold near or below cost in hope that shoppers will buy other items once they are in the store
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leader pricing
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price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high pressure selling to persuade consumers to buy more expensive merchandise
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bait pricing
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price tactic that uses odd number prices to connate bargains and even number price to imply quality
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odd even pricing
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marketing two or more product in a single package for a special price
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price bundling
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reducing the bundle of services that comes with the basic product
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unbundling
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price tactic that charges two separate amounts to consume a single good or service
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two part pricing
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extra fee paid by consumer for violating terms of purchase agreement
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consumer penalty
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setting prices for an entire line of products
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product line pricing
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costs that are shared in the manufacturing and marketing of several products in a product line
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joint costs
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price tactic used for industrial installations and many accessory items in which a firm price is not set until item is finished or delivered
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delayed quotation pricing
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price tactic in which the final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made
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escalator pricing
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use of discounts by salespeople to increase demand for one or more products in a line
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price shading
