Exam 3 (ch. 9 & 10) Flashcards
High initial prices to skim revenues layer by layer from the market
Market-Skimming Price
Low initial price to penetrate the market
Market-Penetration Pricing
A form of pricing in which consumers are charged both an entry fee (fixed price) and a usage fee (per-unit price)
Two-part pricing
Any pricing method that uses consumer demand–based on perceived value–as the central element (difficult to estimate demand)
Demand based pricing (same as customer based pricing)
Reducing prices to reward customer responses such as paying early or promoting a product
Discounts/Allowances
Company sells product or service at two or more prices despite the prices not being based on costs
Segmented Pricing
Sellers consider psychology of prices and not simply economics
- Higher prices indicate a higher quality
- Reference prices
Psychological Pricing
prices buyers carry in mind when looking at a given product
Reference Prices
What are the two pricing types
- two-part pricing
- demand based pricing (consumer based pricing)
estimating a competitive price and designing a product to meet the price
target costing/pricing
what are the four market types
- pure competition
- monopolistic competition
- oligopolistic competition
- pure monopoly
many buyers and sellers with uniform products
Pure competition
Numerous buyers and sellers with range of prices
Monopolistic competition
few sellers that are highly sensitive to each other’s prices
Oligopolistic competition
one seller dominates the market
Pure monopoly
what kind of price adjustment reduces prices to create buying excitement and urgency (ex. Black Friday)
promotional
what kind of price adjustment adjusts based on geographical location of customers
geographical
what kind of price adjustment remains as one price for all buyers everywhere
fixed price
what kind of price adjustment involves adjusting prices continually to meet the characteristics and needs of individual customers and situations (online shopping, fluid pricing for different consumers)
dynamic pricing
what kind of price adjustment involves adjusting prices for international markets
international pricing
what are the five product mix pricing options
- product line pricing
- optional-product pricing
- captive-product pricing
- by-product pricing
- product bundling pricing
the product mix pricing type where management analyzes costs within a product line and sets price. pricing is based on product features
product line pricing
the product mix pricing type that offers optional or accessory items along with main items
optional-product pricing
the product mix pricing type that involves products that must be used along with the main product (ex. ink & printers, video games & game consoles)
captive-product pricing
the product mix pricing type that finds a market to get rid of by-products and lower cost
by-product pricing
the product mix pricing type that puts products together and selling the bundle at a reduced price
product bundling pricing
when the price goes up or down the consumers’ buying habits change
price elastic
when the price goes up the consumers’ buying habits stay the same and when the price goes down consumers’ buying habits also remain unchanged
price inelastic
what does a marketing channel consist of
the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption
what is a marketing channel
it’s the way products get to the end-user, the consumer; and is also known as a distribution channel.
what are the two channel levels
- direct channels
- indirect channels
which channel level involves customers who buy goods directly from the manufacturer
direct channels
which channel level moves the product through other distribution channels to get to the consumer
indirect channels
when it comes to channel levels, the number of intermediaries is…
…the length of the channel
As more channel levels are added…
…producers lose more control and face greater channel complexity
occurs when channel members disagree on roles, activities, or rewards
channel conflict
what are the two types of channel conflict
- horizontal conflict
- vertical conflict
what type of channel conflict occurs among firms at the same channel level
horizontal conflict
what type of channel conflict occurs between different levels of the same channel
vertical conflict
a channel structure where producers, wholesalers, and retailers act as a unified system
VMS (vertical marketing system)
one member of the distribution channel owns the other members
corporate
one member fo the channel is large and powerful enough to coordinate the activities of the other members without an ownership stake
administered VMS
independent firms joining together via a contract
contractual VMS
what are the three types of contractual VMS
- manufactured-sponsored retailer franchise system
- manufacturer-sponsored wholesaler franchise system
- service-firm-sponsored retailer franchise system
what type of contractual VMS involves parent companies sponsoring their independent franchise dealers
manufactured-sponsored retailer franchise system
what type of contractual VMS involves parent company licenses wholesalers to buy raw material and then turn it into a product (ex. bottlers)
manufacturer-sponsored wholesaler franchise system
what type of contractual VMS is a system of service product delivery in which an organization producing a service sets up a number of independently-owned franchised outlets in locations convenient to its customers. (ex. McDonalds restaurant franchise)
service-firm-sponsored retailer franchise system
single firm sets up two or more marketing channels to reach one or more customer segments. expands sales, market coverage, tailor products to diverse customer needs. harder to control, can generate conflict
multichannel distribution system (AKA hybrid marketing channels)
cutting out marketing channel intermediaries. new types of channel intermediaries displace traditional ones.
disintermediation
stocking the product in as many outlet as possible
intensive distribution
giving a limited number of dealers the exclusive right to distribute the company’s products
exclusive distribution
the use of more than one but less than all of the intermediaries who are willing to carry the company’s product
selective distribution
channel of distribution facilitates breaking bulk. a customer can purchase one item instead of the 100 pack the retailer purchased
breaking bulk
a type of supply chain management that moves goods from customers back to the seller’s or manufacturers (ex. recycling technological components)
reverse logistics
a form of retail business wherein the seller accepts customer orders but does not keep goods sold in stock. (take title but never possession)
drop shipper
products that are sold legally, but outside of the brand’s permission
gray market
