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Principles of Marketing > Ch 19 > Flashcards

Ch 19 Flashcards

Pricing Concepts

1
Q

Price

A

That which is given up in an exchange to acquire a good or service

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2
Q

Revenue

A

The price charged to customers multiplied by the number of units sold

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3
Q

Profit

A

Revenue minus expenses

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4
Q

Return on investment (ROI)

A

Net profit after taxes divided by total assets

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5
Q

Market Share

A

A company’s product sales as a percentage of total sales for that industry

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6
Q

Status quo pricing

A

A pricing objective that maintains existing prices or meets the competition’s prices

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7
Q

Demand

A

The quantity of a product that will be sold in the market at various prices for a specified period

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8
Q

Supply

A

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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9
Q

Elasticity of Demand

A

Consumers’ responsiveness or sensitivity to changes in prices

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10
Q

Elastic Demand

A

A situation in which consumer demand is sensitive to changes in price

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11
Q

Inelastic Demand

A

A situation in which an increase or a decrease in price will not significantly affect demand for the product

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12
Q

Dynamic Pricing

A

The ability to change prices very quickly, often in real time using software programs

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13
Q

Surge Pricing

A

Occurs in a fluid market, where demand changes rapidly often hourly. When demand increases, so do prices and vice versa

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14
Q

Variable Cost

A

A cost that varies with changes in the level of output

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15
Q

Fixed Cost

A

A cost that does not change as output is increased or decreased

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16
Q

Markup pricing

A

The cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for

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17
Q

Keystoning

A

The practice of marking up prices by 100 percent, or doubling the cost

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18
Q

Break-even analysis

A

A method of determining what sales volume must be reached before total revenue equals total costs

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19
Q

Extranet

A

A private electronic network that links a company with its suppliers and customers

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20
Q

Price Strategy

A

A basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product’s life cycle

21
Q

Price Skimming

A

A pricing policy whereby a firm changes a high introductory price, often coupled with heavy promotion

22
Q

Penetration Pricing

A

A pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out as a way to reach the mass market

23
Q

Base Price

A

The general price level at which the company expects to sell the good or service

24
Q

Quantity Discount

A

A price reduction offered to buyers buying in multiple units or above a specified dollar amount

25
Q

Cumulative Quantity Discount

A

A deduction from list price that applies to the buyer’s total purchases made during a specific period

26
Q

Noncumulative Quantity Discount

A

A deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period

27
Q

Cash Discount

A

A price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill

28
Q

Functional Discount (Trade Discount)

A

A discount to wholesalers and retailers for performing channel functions

29
Q

Seasonal Discount

A

A price reduction for buying merchandise out of season

30
Q

Promotional allowance (trade allowance)

A

A payment to a dealer for promoting the manufacturer’s products

31
Q

Rebate

A

A cash refund given for the purchase of a product during a specific period

32
Q

Value-based Pricing

A

Setting the price at a level that seems to the customer to be a good price compared to the prices of other options

33
Q

FOB origin pricing

A

A price tactic that requires the buyer to absorb the freight costs from the shipping point (“free on board”)

34
Q

Uniform delivered pricing

A

A price tactic in which the seller pays the actual freight charges and bills every purchases an identical, flat freight charge

35
Q

Zone pricing

A

A modification of uniform delivered pricing that divides the Untied States (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone

36
Q

Freight absorption pricing

A

A price tactic in which the seller pays all or part of the actual freight chargers and does not pass them on to the buyer

37
Q

Basing-point pricing

A

A price tactic that charges freight from a given (basing) point, regardless of the city from which the goods are shipped

38
Q

Single-price tactic

A

A price tactic that offers all goods and services at the same price (or perhaps two or three prices)

39
Q

Flexible pricing (variable pricing)

A

A price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities

40
Q

Price lining

A

The practice of offering a product line with several items at specific price points

41
Q

Leader pricing (loss-leader pricing)

A

A price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store

42
Q

Bait Pricing

A

A 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

43
Q

Odd-even pricing (psychological pricing)

A

A price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality

44
Q

Price Bundling

A

Marketing two or more products in a single package for a special price

45
Q

Two-part pricing

A

A price tactic that charges two separate amounts to consume a single good or service

46
Q

Consumer penalties

A

An extra fee paid by the consumer for violating the terms of the purchase agreement

47
Q

Unfair trade practice acts

A

Laws that prohibit wholesalers and retailers from selling below cost

48
Q

Price fixing

A

An agreement between two or more firms on the price they will charge for a product

49
Q

Predatory Pricing

A

The pricing of charging a very low price for a product with the intent of driving competitors out of business or out of a market

Principles of Marketing (7 decks)

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