Chapter 11 Flashcards
the money or other considerations (including
other products and services) exchanged for the ownership or use of a product or service is known as
Price
The practice of exchanging products and services for other products and services rather than for money is known as
Barter
The ratio of perceived benefits to price or value
= Perceived benefits divided by price is known as
Value
the practice of simultaneously increasing
product and service benefits while maintaining or decreasing price is known as
Value Pricing
Total revenue − Total cost; or Profit= (Unit price × Quantity sold) − (Fixed cost + Variable cost)
is the formal for which equation?
Profit Equation
What is the profit equation formula?
Total revenue − Total cost; or Profit = (Unit price × Quantity sold) − (Fixed cost + Variable cost)
What term involves setting the highest initial price that
customers really desiring the product are willing to pay when introducing a new or innovative product
Skimming Price
What term involves setting a high price so that quality-
or status-conscious consumers will be attracted to the product
and buy it.
Prestige Pricing
What term involves setting a low initial price on a
new product to appeal immediately to the mass market.
Penetration Pricing
What term involves setting prices a few dollars or cents under an even number?
Odd-Even Pricing
What term involves the marketing of two or more products in a single package price?
Bundle Pricing
What term involves adding a fixed percentage to the cost of all items in a specific product class
Standard Markup Pricing
What cost involves summing the total unit cost of providing a product or service an
Cost-plus pricing
What term involves setting an annual target of a specific dollar volume of profit
Target Profit Pricing
What term involves setting a price to achieve a profit that is a specified percentage of the sales volume
Target Return on-sales pricing
What term involves setting a price to achieve an annual target return-on-investment (ROI)
Target Return-on-investment pricing
What term involves setting a price that is dictated by
tradition, a standardized channel of distribution, or other competitive factors
Customary Pricing
What term involves setting a
market price for a product or product class based on a
subjective feel for the competitors’ price or market price as the benchmark.
Above-, or below-market pricing
What term involves deliberately selling a product
below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products with large markups as well
Loss-leader pricing
a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price is known as a
Demand Curve
the percentage change in
quantity demanded relative to a percentage change in price is known as
Price Elasticity of Demand
the total money received from the sale of a product is known as
Total Revenue
the total expense incurred by a firm in producing and marketing a product. Total cost is the sum of fixed cost and variable cost is known as
Total Cost
a technique that analyzes the
relationship between total revenue and total cost to determine profitability at various levels of output is known as
Break-Even Analysis
What term specifies the role of price in an organization’s
marketing and strategic plans.
Pricing Objectives
What are the factors that limit the range of prices a firm may set?
Pricing Constraints
What is the formula for final price?
Final Price = List Price-
( Incentives+Allowances) + Extra Fees
Final Price = List Price-
( Incentives+Allowances) + Extra Fees
is the formula for which equation?
Final Price
What is the formula for value?
Perceived benefits DIVIDED BY
Price
What is the formula for profit?
Profit = Total revenue- Total Cost
What are the 4 approaches for selecting approximate price level?
- Demand-oriented approaches
- Cost-oriented approaches
- Profit-oriented approaches
- Competition-oriented approaches
What are the examples of demand-oriented approaches?
Skimming
Penetration
Prestige
Odd-Even
Bundle
What are the examples of cost-oriented approaches?
Standard markup
Cost-plus
What are the examples of profit-oriented approaches?
Target profit
Target return on sales
Target return on investment
What are the examples of competition-oriented approaches?
- Customary
- Above, at, or below market
- Loss leader
