Ch 17 Pricing Objective and Policies Flashcards
the amount of money that is charged for “something” of value
Price
sets a specific level of profit as an objective
Target return objective
seeks to get as much profit as possible
Profit maximization objective
seeks some level of units sales, dollar sales, or share of marketing- without referring to profit
Sales-oriented objective
don’t-rock-the-pricing-boat objective
Status quo objectives
affresive action on one or more of the Ps other than price
Nonprice competition
consciously set prices
Administered prices
means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities
one-price policy
means offering the same product and quantities to different customers at different prices
Flexible-price policy
tries to sell the top (skim the cream) of a market- the top of the demand curve- at a high price before aiming at more price-sensitive customers
Skimming price policy
tries to sell the whole market at one low price
Penetration pricing policy
temporary price cuts- to speed new products into a market and get customers to try them.
Introductory price dealing
are the prices final customers or users are normally asked to pay for products
Basic list prices
are reductions offered to encourage customers to buy in larger amounts
Quantity discounts
are reductions from the price given by a seller to buyers who either give up some marketing function or provide the funstions themselves
Discounts
apply to purchases over a given period0 such as a year- and the discounts usually increase as the amount of purchase increases
Cumulative quantity discounts
apple only to individual orders
Noncumulative quantity discounts
are discounts offered to encourage buyers to buy earlier than present demand requires
Seasonal discounts
means the payment for the face value to the invoice is due immediately.
Net
are reductions in prce to encourage buyers to pay their bills quickly
Cash discounts
means the buyer can take 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.
2/10, net 30
is a list price reduction given to channel members for job they are going to do
Trade (functional) discounts
is a temporary discount from the list price
Sales price
setting low list price rather than relying on frequent sales, discounts, or allowances.
Everyday low pricing
like discounts, are given to final consumers, customers, or channel members for doing something or accepting less of something
Allowances
are price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier’s products locally.
Advertising allowances
sometimes called slotting allowances- are given to an intermediary to get shelf space for a product
Stocking allowances
sometimes called PM1 or spiffs- are given to retailers bu manufacturers or wholesalers to pass on the retailer’s salesclerks for aggressively selling certain items.
Push money ( or prize money) allowances
is a price reduction given for used products when similar new products are bought
trade-in allowance
refunds paid to customers after a purchase
rebates
which means free on board some vehicle at some place
F.O.B.
means making an average freight charge to all buyers within specific geographic areas
Zone pricing
mean making an average freight charge to all buyers
Uniform delivered pricing
means absorbing freight cost so that a firm’s delivered price meets that of the nearest competitor
freight-absorbtion pricing
means setting a fair price level for a marketing mix that really gives the target market superior customer value
Value pricing
put a lower limit on prices, especially at the wholesaler and retail levels
unfair trade practice acts
is pricing a product sold in a foreign market below the cost of producing it or at the price lower than in its domestic market
dumping
prices customers are shown to suggest that the price has been discounted from list
Phony list price
bans “unfair or deceptive acts in commerce
Wheeler Lea Amendment
competitors getting together to raise, lower, or stabilize prices- is common and relative easy
price fixing
make price discrimination illegal
Robinson-Patman act
selling the same products to different buyers at different prices- if it injures competition
Price discrimination
The price charged to customers
multiplied by the number of
units sold
Revenue
Revenue minus expenses
Profit
The buyer absorbs the freight costs from the shipping point(“free on board”).
FOB Origin
Pricing
The seller pays the freight charges and bills the purchaser an identical, flat freight charge.
Uniform
Delivered
Pricing
The U.S. is divided into zones, and a flat freight rate is charged to
customers in a given zone.
Zone Pricing
The seller pays for all or part of the freight charges and does not pass them on to the buyer.
Freight
Absorption
Pricing
Laws that prohibit wholesalers
and retailers from selling below
cost
Unfair TradePractices Acts
An agreement between 2 or more
firms on the price they will charge
for a product
Price
Fixing
The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market.
Predatory Pricing
