Chapter 20 Flashcards
Price
The value paid for a product in a marketing exchange.
Barter
The trading of products.
Price Competition
Emphasizing price as an issue and matching or beating competitor’s prices.
Nonprice Competition
Emphasizing factors other than price to distinguish a product from competing brands.
Demand Curve
A graph of the quantity of products expected to be sold at various prices if other factors remain constant.
Price Elasticity of Demand
A measure of the sensitivity of demand to changes in price.
Fixed Costs
Costs that do not vary with changes in the number of units produced or sold.
Average Fixed Cost
The fixed cost per unit produced.
Variable Costs
Costs that vary directly with changes in the number of units produced or sold.
Average Variable Cost
The variable cost per unit produced.
Total Cost
The sum of averaged fixed and average variable costs times the quantity produced.
Average Total Cost
The sum of the average fixed cost and the average variable cost.
Marginal Cost (MC)
The extra cost incurred by producing one more unit of a product.
Marginal Revenue (MR)
The change in total revenue resulting from the sale of an additional unit of a product.
Break-Even Point
The point at which the costs of producing a product equal the revenue made from selling the product.
Internal Reference Price
A price developed in the buyer’s mind through experience with the product.
External Reference Price
A comparison price provided by others.
Value Conscious
Concerned about price and quality of a product.
Price Conscious
Striving to pay low prices.
Prestige Sensitive
Drawn to products that signify prominence and status.
Price Discrimination
Employing price differentials that injure competition by giving one or more buyers a competitive advantage.
Trade (functional) Discount
A reduction off the list price a producer gives to an intermediary for performing certain functions.
Quantity Discounts
Deductions from the list price for purchasing in large quantities.
Cumulative Discounts
Quantity discounts aggregated over a stated time period.
Noncumulative Discounts
One time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased.
Cash Discounts
Price reductions given to buyers for prompt payment or cash payment.
Seasonal Discount
A price reduction given to buyers for purchasing goods or services out of season.
Allowance
A concession in price to achieve a desired goal.
Geographic Pricing
Reductions for transportation and other costs related to the physical distance between buyer and seller.
F.O.B. Factory
The price of merchandise at the factory before shipment.
F.O.B. Destination
A price indicating the producer is absorbing shipping costs.
Uniform Geographic Pricing
Charging all customers the same price, regardless of geographic location.
Zone Pricing
Pricing based on transportation costs within major geographic zones.
Base-Point Pricing
Geographic pricing that combines factor price and freight charges from the base point nearest the buyer.
Freight Absorption Pricing
Absorption of all parts of actual freight costs by the seller.
Transfer Pricing
Prices charged in sales between an organization’s units.
