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Pricing strategy > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Refers to the total cost for customers to acquire the product and may involve both monetary and psychological costs such as the time and effort expended in the acquisition.

A

Price

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2
Q

It determines the value of a good or service to the buyers even to the sellers

A

Price

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3
Q

It is the amount of
money needed in order to acquire a product or service and its accompanying service.

A

Price

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4
Q

It is the amount of money charged for a product or service or the sum of the values that consumers
exchange for the benefits of having or using the product or service.

A

Price

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5
Q

The only element in the marketing ix the produces revenue

A

Price/pricing

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6
Q

expenses that vary directly with the level of production

A

Variable Costs

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7
Q

overhead costs are expenses that do not vary even if the level of production or sales changes

A

Fixed costs

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8
Q

not directly attributed to creating a product
or service.

A

Fixed costs

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9
Q

Five steps in developing pricing strategy

A
  1. Objective
  2. Broad pricing Policy
  3. Price Strategy
  4. Implementing Price Strategy
  5. Price Adjustments
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10
Q

The firm is interested in sales growth and/or maximizing market share.

A

Sales Based

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11
Q

The concern of the company is to increase sales by offering new product design, product lines, and promotional items

A

Sales Based

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12
Q

The firm is interested in maximizing profit, earning a satisfactory profit,
optimizing the return on investment, or securing an early recovery of cash

A

Profit-Based

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13
Q

Its thrust is to satisfy the investors/stockholders by providing them an immediate return of investment.

A

Profit Based

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14
Q

The firm seeks to avoid reasonable government actions, minimize
the effects of competitor actions, maintain good channel relations, discourage the entry of competitors, reduce demands from suppliers, and stabilize prices

A

Status quo Based

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15
Q

The goal of the company
is to maintain a good image of the community by creating projects/programs that protect
its welfare and goodwill

A

Status Quo Based

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16
Q

provides procedures, rules, and methods to act in one specific situation. It links prices with the target market, image, and other marketing elements. It makes sure that pricing decisions are coordinated by other sellers.

A

Broad Price Policies

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17
Q

Broad Price policies include

A

Penetration and Skimming Pricing

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18
Q

uses low prices to capture/attract the larger/mass market for a
product or service

A

Penetration Pricing

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19
Q

The preference of the mass majority of the market will be the basis of the price set

A

Penetration Pricing

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20
Q

uses high prices to attract the market segment more concerned with
product quality, uniqueness, or status than price

A

Skimming Pricing

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21
Q

The seller chooses a high price in order
to determine who will really patronize the product.

A

Skimming Pricing

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22
Q

are ways or some actions to accomplish the goals and objectives of the company
in gaining profit

A

Pricing Strategies

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23
Q

Price strategy can be classified into three different categories:

A
  1. Cost based price strategy
  2. Demand based price strategy
  3. Competition based price strategy
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24
Q

is when the firm sets prices by computing merchandise, services, and overhead costs than adding the desired profit to those figures

A

Cost Based Price Strategy

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25
Q

True or False

After combining all the expenses incurred during the production of the product, the seller must also decide the best profit as part of the price of a product is part of Cost Based pricing.

A

TRUE

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26
Q

T or F

Cost Based pricing is when the firm sets prices after researching consumer
desires and makes sure the range of prices is acceptable to the target market.

A

False. Demand based is when the firm sets prices after researching consumer
desires and makes sure the range of prices is acceptable to the target market.

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27
Q

The firms conduct researches regarding the saleability of the product. If the product meets the criteria of the market, the firm can raise the price of the product because it can assure profit based on the market demand

This is under what strategy?

A

Demand based Price strategy

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28
Q

is when the firm sets prices in relation to the
competitors. The entrepreneur must research the prices set by their competitors.

A

Competition Based Price Strategy

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29
Q

________is the firm readiness to sell the product which would be effective
if given an attractive price strategy

A

Implementing Price strategy

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30
Q

when one price is maintained over an extended period of time. Normally the price of the product will not be easily changed.

A

Customary Pricing

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31
Q

The entrepreneur must
consider the price of the product which is affordable to the majority of buyers.

A

Customary pricing

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32
Q

is when the price responds to cost fluctuations or differences in demand.

A

Variable Pricing

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33
Q

The entrepreneur must consider the law of demand and supply. If there are
sufficient supplies and few demands, the price will increase and vice versa

A

Variable Pricing

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34
Q

is when the price is charged to all customers buying the product or service under similar conditions

A

One Price Policy

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35
Q

The entrepreneur will set one price for all products available for sale even though they differ from design.

A

One price policy

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36
Q

is based on the customer’s ability to negotiate or buy the power of the
customer

A

Flexible pricing

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37
Q

The entrepreneur must meet the needs and wants of the customer so that they
need to adjust the price just to ensure continued patronage and loyalty.

A

Flexible Pricing

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38
Q

is prices set at levels below even values. The entrepreneur uses odd numbers to attract customers in pricing a product

A

Odd pricing

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39
Q

is when the consumers believed that high price represents high quality and low prices represent low quality

A

Price quality association

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40
Q

is when customers set price floors and will not buy at prices below those floors. Above price ceilings, items would seem too expensive.

A

Prestige pricing

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41
Q

The entrepreneur must consider that products must follow the price floor and ceiling set by the government.

A

Prestige pricing

42
Q

Is selling key items at low prices to gain consumer loyalty within its
product line.

A

Leader pricing

43
Q

Under the pricing strategy, it is hoped that the customers will buy regularly priced products together with the specially priced one. The entrepreneur must be aggressive to win the respect of the competitors so as they can value the actions that will take place

A

Leader pricing

44
Q

is when the entrepreneur offers discounts to consumers for buying in large quantities.

A

Multiple Unit pricing

45
Q

The entrepreneur must consider that selling more units will produce more profits. To prevent overstocking and maintain proper inventory, selling in bulk can increase profit and promote growth

A

Multiple Unit pricing

46
Q

is when instead of setting one price for a single model of a good or service,
the firm sells two models of different quality and features at different prices

A

Price Lining

47
Q

is when the firm offers a basic product, options, and customer service
for one total price

A

Price Bundling

48
Q

when the firm sells by individual components and allows customer to decide what to buy

A

Unbundled Pricing

49
Q

The entrepreneur will set the price of the product item from the other. It can be sold separately and individually.

A

Unbundled Pricing

50
Q

is when the prices are set depending on the distance of the buyer to the seller. Normally this activity is done if both parties are or from each other.

A

Geographic Pricing

51
Q

when the buyer pays for all freight charges regardless of the distance.

A

FOB Factory

52
Q

The buyer must be willing to pay all the expenses incurred during the transfer of the
product from one place to another

A

FOB Factory

53
Q

is when buyers pay the same delivered price for the same quantity of goods. The entrepreneur shall consider the number of goods in setting the price of the product.

A

Uniform Delivered Pricing

54
Q

is when the buyers within the geographic zone pay a uniform delivered
price. The entrepreneur must provide the same measure of charges to one particular
location

A

Zone Pricing

55
Q

when the cost of transporting the goods is computed from the base point nearest buyer

A

Base point pricing

56
Q

price agreements, including discounts, the timing of
payments, and credits agreements

A

Terms of Payment

57
Q

are a reduction in the selling price
given to customers for varying reasons: paying in cash, performing certain
functions, buying in large quantities, and off-season buying

A

Discounts

58
Q

Changes in cost, competitive conditions and consumer demand require
changes in price.

A

Price Adjustments

59
Q

are regularly quoted prices to customers, as in catalogs, price tags, and purchase orders

A

List Prices

60
Q

happen when the contract which allows price increase after the sale is concluded before delivery is made

A

Escalator clause

61
Q

The seller must communicate to the
buyer that there is a price adjustment due to some reasons and must agree to the new price

A

Escalator clause

62
Q

is supplementary to list prices.

A

Surcharge

63
Q

These are additional charges added to the total price. The seller can include this or disregard to better gain customer loyalty and profitability of the company

A

Surcharge

64
Q

happens when the company is raising regular selling prices because demand is unexpectedly high, or costs are rising

A

Mark-ups

65
Q

are reductions from original selling prices to meet lower prices of competitors, overstocking, shop-worn merchandise, and increase customer traffic

A

Markdowns

66
Q

setting the price steps between various products in a product line
based on cost difference between the products, customer evaluations of different features and competitor‘s price

A

Product line pricing

67
Q

the pricing is along with the main product.

A

Optional product pricing

68
Q

setting a price for products that must be used along with a main
products that must be use along with a main products, such as blades for razor and film for
a camera.

A

Captive product pricing

69
Q

setting a price in order to make the main product‘s price more competitive

A

By-product pricing

70
Q

combining several products and offering the bundle at a reduced price.

A

Product bundle pricing

71
Q

a straight reduction in price on purchase during a stated period of time.

A

Discount and allowance pricing

72
Q

selling a product or service at two or more prices, where the difference in prices is not based on different cost

A

Segmented pricing

73
Q

A pricing approach that considers the psychology of prices and not simply the economics; the price is used to something about product

A

Psychological pricing

74
Q

temporarily pricing products below the list price and sometimes even below cost to increase short ruin sales

A

Promotional Pricing

75
Q

A company also must decide how to price its products for customers located in different parts of the country or world.

A

Geographical Pricing

76
Q

Companies that market products internationally must decide what
prices to charge in the different countries

A

International Pricing

77
Q

Supermarkets and department stores often drop the price on well Known brands to stimulate additional store traffic

A

Loss-leader pricing

78
Q

Sellers will establish special prices in certain seasons to draw in more customers

A

Special Event pricing

79
Q

True or false

Manufacturers of loss-leader brands typically object because this practice can dilute the
brand image and bring complaints from retailers who charge the list price.

A

True

80
Q

Sellers will establish special prices in certain seasons to draw in more customer

A

Special event pricing

81
Q

Auto companies and other consumer-goods companies offer this to encourage purchase of the manufacturers‘ products within a specified time period.

A

Cash Rebates

82
Q

can help clear inventories without cutting the stated list price.

A

Rebates

83
Q

Instead of cutting its price, the company can offer this to attract customers

A

Low interest financing

84
Q

Sellers, especially mortgage banks and auto companies, stretch loans over longer periods and thus lower the monthly payments

A

Longer Payment

85
Q

Companies can promote sales by adding a free or low- cost warranty or service contract.

A

Warranties and service contracts

86
Q

This strategy involves setting an artificially high price and then offering the product at substantial saving

A

Psychological discounting

87
Q

Different customer groups are charged different prices for the same product or service. For example, museums often charge a lower admission fee to students and senior citizens

A

Customer segmented pricing

88
Q

Different versions of the product are priced differently but not proportionately to their respective costs.

A

Product form pricing

89
Q

Some company‘s price the same product two different levels based on image differences at

A

Image pricing

90
Q

Coca-Cola carries a different price depending on whether it is purchased ill a fine restaurant, a fast-food restaurant, or a vending machine

A

Channel Pricing

91
Q

The same product is priced differently at different locations even though the cost of offering at each location is the same

A

Location Pricing

92
Q

Prices are varied by season, day, or hour.

A

Time pricing

93
Q

To determine the right price:

A
  1. The customer’s perception of the value of the kind of business firm;
  2. The costs involved such as overhead, storage, financing, production, and distribution; and,
  3. The profit objectives of the firm
94
Q

this method covers all costs, variable and fixed, plus an extra increment to deliver profit

A

Cost plus pricing

95
Q

this is a method of pricing where the firm sets prices based on buyer desires. The range acceptable to the target market is determined.

A

Demand pricing

96
Q

this method of pricing calls for price-setting on the basis of prices charged by competitors

A

Competitive pricing

97
Q

This is a form of cost-oriented pricing in which the firm sets prices by adding per-unit merchandise costs, operating expenses, and desired profit

A

Market Pricing

98
Q

what are the two factors that influence Price determination

A

Internal and External

99
Q

True or False

The marketing objectives, marketing mix strategy, and the cost-plus
pricing strategy is under external factors

A

False. The marketing objectives, marketing mix strategy, and the cost-plus
pricing strategy is under Internal factors

100
Q

What are the external factors in pricing strategy?

A

Market demand
Competitors’ strategy
Economic and other social concerns

Pricing strategy (3 decks)

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