Chapter 13 Flashcards
Profit-maximizing
Pricing to maximize profit (bottom line) and may sacrifice unit sales to maximize profit
Market-share
Pricing to gain the greatest possible market percentage
Cost-oriented pricing
Considers the cost of the product and adds a “markup” to arrive at a final cost (retail costs vs. retailer costs - make more money)
Mark-up precentage
Markup/Sales Price x 100 = Markup Percentage
Break-Even Analysis
Cost–Volume–Profit Relationships (losses –> breakeven point –> turn to profits)
Pricing Strategy
The pricing plan is based on the marketing mix; how to price existing products (Above, below, or near market prices, Fixed vs. Dynamic Pricing for Online Business, pricing new products)
Price Skimming
Setting an initially high price to cover new product costs and generate a profit
Penetration Pricing
Setting an initially low price to establish a new product in the market
Price lining
Setting a limited number of prices for certain categories of products
Psychological pricing + Odd–even pricing
Consumers do not respond rationally to stated prices. Customers prefer items not stated in even dollar amounts
Discounting
Price reduction offered as an incentive to purchase
Promotion + key objective
Techniques to communicate information about products. It increases product awareness & knowledge, increases product preference, helps position products and add value, and help control/stabilize sales volume
Push strategy
The firm promotes aggressively to intermediaries
Pull strategy
The firm promotes directly to consumers, who demand the product from intermediaries
The promotional mix strategies
The combination of tools used to promote a product; ex. advertising, personal selling, sales promotions, publicity, and public relations