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Marketing 330 > Final Exam - Chapter 20 > Flashcards

Final Exam - Chapter 20 Flashcards

1
Q

Price

A

the value paid for a product in a marketing exchange

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2
Q

Barter

A

the trading of products; oldest form of exchange

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3
Q

Profit Equations

A

profit = total revenue - total costs

profit = (price X quantity sold) - total costs

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4
Q

Price Competition

A

emphasizing price as an issue and matching or beating competitors’ prices; must be the low-cost seller; one in industry (ex: Walmart)

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5
Q

Nonprice Competition

A

emphasizing factors other than price to distinguish a product from competing brands; differentiators (ex: Festival Foods)

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6
Q

Demand Curve

A

graph of price vs. quantity

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7
Q

Prestige Products

A

sell better at high prices partly because the expense makes buyers feel elite; vertical parabolic demand curve (ex: Betty Crocker Cookbooks)

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8
Q

Factors that Can Influence Demand

A

changes in buyers’ needs (family size)

variation in effectiveness of marketing mix variables (ads/promo)

presence of substitutes

dynamic environment changes such as tech. improvements

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9
Q

Price Elasticity of Demand

A

a measure of the sensitivity of demand to changes in price

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10
Q

Inelastic Demand

A

price increases, demand decreases by a small amount

ex: healthcare/electricity

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11
Q

Elastic Demand

A

price increases, demand decreases by large amount

ex: coffee drinks/fast food

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12
Q

Who Sets the Price?

A

the market!; you need to align your costs/production to live within it (cover costs and meet customer expectations)

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13
Q

Marginal Analysis

A

what happens to a firm’s costs and revenues when production (or sales volume) changes by one unit

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14
Q

Fixed Costs

A

costs that do not vary with changes in the number of units produced/sold (ex: rent)

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15
Q

Variable Costs

A

costs that vary directly with changes in the number of units produced/sold (ex: raw materials used)

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16
Q

Total Costs

A

the sum of fixed and variable costs

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17
Q

Marginal Cost (MC)

A

the extra cost incurred by producing one more unit of a product

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18
Q

Marginal Revenue (MR)

A

the change in total revenue resulting from the sale of an additional unit of product

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19
Q

Rules of Marginal Analysis

A

MR > MC = add to profit

MC > MR = subtract from profit

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20
Q

8 Factors that Affect Pricing Decisions

A

organizational and marketing objectives; pricing objectives; costs; other marketing mix variables; channel member expectations; customer interpretation and response; competition; legal and regulatory issues

21
Q

FAPD Organizational and Marketing Objectives

A

Prices should be consistent with the organization’s goals, mission and marketing objectives (ex: Walmart and premium prices? Nope.)

22
Q

FAPD Pricing Objectives

A

Take share of market; not likely to increase price; set price at or below products of similar quality

23
Q

FAPD Costs

A

A marketer should analyze all costs so they can be included in the total cost associated with a product; Cost should not determine price in the long term—price is determined by the market place.

24
Q

FAPD Other Marketing Mix Variables

A

ex: price may determine how a product is promoted

25
Q

FAPD Channel Member Expectations

A

A marketer must consider what members of the distribution channel expect such as discounts for large orders and prompt payment; Retail Price/Wholesale and Retail discounts

26
Q

FAPD Customers’ Interpretation and Repsonse

A

How will our customers interpret our prices and respond to them?

27
Q

Internal Reference Price

A

a price developed in the buyer’s mind through experience with the product

28
Q

External Reference Price

A

a comparison price provided by others; products we have less experience with

29
Q

Value Consciousness

A

concerned about price and quality of a product

30
Q

Price Consciousness

A

striving to pay low prices

31
Q

Prestige Sensitivity

A

drawn to products that signify prominence and status

32
Q

FAPD Competition

A

a marketer must know competitor’s prices, adjust their own prices and assess how competitors will respond

33
Q

FAPD Legal and Regulatory Issues

A

price discrimination is employing price differentials that injure competition by giving one or more buyers a competitive advantage is prohibited by law

34
Q

Issues Unique to Pricing Business Producss

A

discounts, geographic pricing, transfer pricing

35
Q

Trade (functional) Discounts

A

a reduction off the list price a producer gives to an intermediary for performing certain functions

36
Q

Quantity Discounts

A

deductions from the list price for purchasing in large quantities

37
Q

Cumulative Discounts

A

quantity discounts aggregated over a stated time period (rebates)

38
Q

Noncumulative Discounts

A

one time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased

39
Q

Cash Discounts

A

price reductions given to buyers for prompt payment or cast payment (ex: 2/10 net 30)

40
Q

Seasonal Discounts

A

price reduction given to buyers for purchasing goods or services out of season

41
Q

Allowances

A

concession in price to achieve a desired goal

42
Q

Geographic Pricing

A

reductions for transportation and other costs related to the physical distance between buyer and seller

43
Q

FOB Factory

A

is the price of merchandise at the factory before shipment (Price before being shipped) producer pays shipping fee

44
Q

FOB Destination

A

is a price indicating the producer is absorbing shipping costs; consumer pays shipping fee

45
Q

Uniform Geographic Pricing

A

is charging all customers the same price, regardless of geographic location

46
Q

Zone Pricing

A

pricing based on transportation costs within major geographic zones (ex: USPS)

47
Q

Freight Absorption Pricing

A

absorption of all or part of actual freight costs by seller

48
Q

Transfer Pricing

A

prices charged in sales between an organization’s units (ex: if Festival Foods bakery need a bag of chocolate chips to complete an order)

Marketing 330 (16 decks)

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