Chapter 14 Flashcards
Skimming Pricing
Setting the highest initial price that customers who really desire the product are willing to pay when introducing a new/innovative product
Penetration Pricing
Setting a low initial price on a new product to appeal immediately to the mass market
Prestige Pricing
Setting a high price so that quality- or status- conscious customers will be attracted to the product and buy it
Price Lining
Setting the price of a line of products at a number of different specific pricing levels
Odd- Even Pricing
Setting prices a few dollars or cents under an even number
Target Pricing
Consists of (1) estimating the price that would be willing to pay f, (2) working backward through markups taken by retailers, and then (3) adjusting the composition and features to achieve the target price
Bundle Pricing
Involves the marketing of two or more products in a single package price
Yield Management Pricing
Involves the charging of different prices to maximize revenue for a set amount of capacity at any given time
Standard Markup Pricing
Involves adding a fixed percentage to the cost of all items in a specific product class
Cost- Plus Pricing
Involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
Target Profit Pricing
Involves setting an annual target of a specific dollar volume of profit
Target Return-on-Sales Pricing
Involves setting a price to achieve a profit that is a specified percentage of the sales volume
Target Return-on-Investment Pricing
Involves setting a price to achieve an annual target return-on-investment (ROI)
Customary Pricing
Involves setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors
Above-, At-, or Below-Market Pricing
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
Loss-Leader Pricing
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
Fixed-Price Policy
Involves setting one price for all buyers of a product or service. Also called a one-price policy
Dynamic Pricing Policy
Involves setting different prices for products and services in real time in response to supply and demand conditions. Also called a flexible price policy
Product-Line Pricing
Involves the setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item
Price War
Involves successive price cutting by competitors to increase or maintain their unit sales or market share
Quantity Discounts
Reductions in unit costs for a larger order
Promotional Allowances
Cash payments or extra amount of “free goods” awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product
Everyday Low Pricing (EDLP)
The practice of replacing promotional allowances with lower manufacturer list prices
Price Fixing
Involves a conspiracy among firms to set prices for a product
Price Discrimination
The practice of charging different prices to different buyers for products like grade and quality
Predatory Pricing
The practice of charging a very low price for a product with the intent of driving competitors out of business
