Pricing Flashcards
Price Elasticity Of Demand
the sensitivity of customers to price changes in terms of the quantities they will buy
Horizontal Price Fixing
an agreement among manufacturers, among wholesalers, or among retailers to set prices
Vertical Price Fixing
when manufacturers or wholesalers seek to control the retail prices of their goods and services
Robinson-Patman Act
bars manufacturers and wholesalers from discriminating in price or purchase terms in selling to individual retailers if these retailers are purchasing products of “like quality” and the effect of such discrimination is to injure competition
Minimum-Price Laws
laws that prevent retailers from selling certain items for less than their cost plus a fixed percentage to cover overhead
Predatory Pricing
large retailers seek to reduce competition by selling goods and services at very low prices, this causing small retailers to go out of business
Loss Leaders
retailers price selected items below cost to lure more customer traffic for those retailers
Unit Pricing
some retailers must express both the total price of an item and its price per unit of measure
Item Price Removal
prices are marked only on shelves or signs and no on individual items
Bait-And-Switch Advertising
illegal practice in which a retailer lures a customer by advertising goods and services at exceptionally low prices
Gray Market Goods
brand-name products bought in foreign markets or goods transshipped from other retailers
Market Penetration Pricing
a retailer seeks large revenues by setting low prices and selling many units
Market Skimming Pricing
a firm sets premium prices and attracts customers less concerned with price than service, assortment, and prestige
Demand-Oriented Pricing
a retailer sets prices based on consumer desires
Cost-Oriented Pricing
retailer sets a price floor
Competition-Oriented Pricing
retailer sets its prices in accordance with competitors’
Price-Quality Association
many consumers feel high prices connote high quality and low prices connote low quality
Prestige Pricing
assumes that consumers will not buy goods and services at prices deemed too low
Markup Pricing
retailer sets prices by adding per-unit merchandise costs, retail operating expenses, and desired profit
Markup
difference between merchandise costs and selling price
Markup Percentage
[% at retail = (retail selling price-merchandise cost )/(retail selling price ) ]
[% at cost = (retail selling price-merchandise cost)/(merchandise cost)]
Initial Markup
based on original retail value assigned to merchandise less the costs of merchandise
Maintained Markup
based on the actual prices received for merchandise sold during a time period less merchandise cost
Gross Margin
difference between net sales and the total cost of goods sold
