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BUS 343 > Chapter 9 > Flashcards

Chapter 9 Flashcards

1
Q

psychological costs

A

the stress, anxiety, or mental difficulty of buying and using a product

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2
Q

operating costs

A

costs involved with using a product

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3
Q

switching costs

A

costs involved in moving from one brand to another

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4
Q

opportunity cost

A

the value of something that is given up to obtain something else

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5
Q

profit objectives

A

pricing products with a focus on a target level of profit growth or a desired net profit margin

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6
Q

SMART objectives

A

objectives that are specific, measurable, attainable, relevant, and time-bound

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7
Q

sales or market share objective

A

pricing products to maximize sales or to attain a desired level of sales or market share

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8
Q

prestige products

A

products that have a high price and that appeal to status-conscious consumers

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9
Q

demand curve

A

a plot of the quantity of a product that customers will buy in a market during a period of time at various prices if all other factors remain the same

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10
Q

price elasticity of demand

A

the percentage change in unit sales that results from a percentage change in price

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11
Q

elastic demand

A

demand in which changes in price have large effects on the amount demanded

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12
Q

cross-elasticity of demand

A

when changes in the price of one product affect the demand for another item

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13
Q

variable costs

A

costs of production that are tied to and vary depending on the number of units produced

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14
Q

fixed costs

A

costs of production that do not change with the number of units produced

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15
Q

average fixed cost

A

fixed cost per unit produced

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16
Q

total costs

A

total of fixed and variable costs for a set number of units produced

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17
Q

break-even analysis

A

method for determining the number of units that a firm must produce and sell at a given price to cover all its costs

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18
Q

break-even point

A

point at which total revenue and total costs are equal and beyond which the company makes a profit

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19
Q

contribution per unit

A

difference between the price the firm charges for a product and the variable costs

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20
Q

marginal analysis

A

a method that uses cost and demand to identify the price that will maximize profits

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21
Q

marginal cost

A

the increase in total cost that results from producing one additional unit of a product

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22
Q

marginal revenue

A

the increase in total income or revenue that results from selling one additional unit of a product

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23
Q

markup

A

an amount added to the cost of a product to create the price at which a channel member will sell the product

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24
Q

gross margin

A

markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profit

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25
Q

retailer margin

A

margin added to the cost of a product by a retailer

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26
Q

wholesaler margin

A

amount added to the cost of a product by a wholesaler

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27
Q

list price

A

MSRP, the price the end customer is expected to pay as determined by the manufacturer

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28
Q

internal reference price

A

a set price or a price range in consumers’ minds that they refer to in evaluating a product’s price

29
Q

price subsidies

A

government payments made to protect domestic businesses or to reimburse them when they must price at or below cost to make a sale

30
Q

cost-plus pricing

A

a method of setting prices in which the seller totals all the unit costs for the product and then adds the desired profit per unit

31
Q

price-floor pricing

A

a method for calculating price in which a portion of a firm’s output may be sold at a price that covers only marginal costs of production

32
Q

demand-based pricing

A

a price-setting method based on estimates of demand at different prices

33
Q

target costing

A

a process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed

34
Q

yield-management pricing

A

a practice of charging different prices to different customers to manage capacity while maximizing revenues

35
Q

variable pricing

A

a flexible pricing strategy that reflects what individual customers are willing to pay

36
Q

skimming price

A

charging a very high, premium price for a new product

37
Q

experimental pricing

A

a strategy of experimenting with prices until the price that generates the highest profitability is found

38
Q

judgment

A

a pricing strategy that draws on past experience of the marketer in setting appropriate prices

39
Q

value-based pricing

A

a pricing strategy in which a firm sets prices that provide ultimate value to customers

40
Q

frequent discounting

A

a strategy of frequently using sale prices to increase sales volume

41
Q

penetration pricing

A

a pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it

42
Q

trial pricing

A

pricing a new product low for a limited period of time to lower the risk for a customer

43
Q

price leadership (follower)

A

the firm that sets prices first in an industry, other major firms in the industry follow the leader by staying in line

44
Q

parity pricing strategy

A

a pricing strategy where organizations keep their prices about equal to key competitors’ prices

45
Q

premium pricing

A

firms choose to price their products higher than competitive offerings

46
Q

umbrella pricing

A

a strategy of ducking under a competitor’s price by a fixed percentage

47
Q

price bundling

A

selling two or more goods or services as a single package for one price

48
Q

cost of ownership

A

a pricing strategy that considers the lifetime cost of using the product

49
Q

prestige pricing

A

a strategy where prices are set significantly higher than competing brands

50
Q

captive pricing

A

a pricing tactic for two items that must be used together, where one item is priced very low and the firm makes profit on another high-margin item essential to the operation of the first item

51
Q

f.o.b. origin pricing

A

a pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer

52
Q

f.o.b. delivered pricing

A

a pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price, paid by the manufacturer

53
Q

zone pricing

A

a pricing tactic in which customers in different geographic zones pay different transportation rates

54
Q

uniform delivered pricing

A

a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location

55
Q

freight absorption pricing

A

a pricing tactic in which the seller absorbs the total cost of transportation

56
Q

price lining

A

the practice of setting a limited number of different specific prices, called price points, for items in a product line

57
Q

trade or functional discounts

A

discounts off the list price of products to members of the channel of distribution that perform various marketing functions

58
Q

quantity discounts

A

a pricing tactic of charging reduced prices for larger quantities of a product

59
Q

cumulative quantity discounts

A

discounts based on the total quantity bought within a specified time period

60
Q

noncumulative quantity discounts

A

discounts based only on the quantity purchased in individual orders

61
Q

dynamic pricing

A

a pricing strategy in which the price can easily be adjusted to meet changes in the marketplace

62
Q

online auctions

A

E-commerce that allows shoppers to purchase products through online bidding

63
Q

freenomics

A

the business model of offering a basic good or service for free in order to build a customer base to which added value offerings can be sold

64
Q

bait and switch

A

an illegal marketing practice in which an advertised price special is used as bait to get customers into the store with the intention of switching them to a higher-priced item

65
Q

predatory pricing

A

the strategy of selling products at unreasonably low prices to drive competitors out of business

66
Q

loss-leader pricing

A

the pricing strategy of setting prices below cost to attract customers into a store

67
Q

price discrimination

A

the illegal practice of offering the same product of like quality and quantity to different business customers at different prices, thus lessening competition

68
Q

price maintenance

A

the collaboration of two or more firms in setting prices, usually to keep prices high

69
Q

bid rigging

A

collusion between suppliers responding to bid requests to lessen competition and secure higher margins

BUS 343 (5 decks)

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