Pricing Considerations & Strategies

Question 1

Break-even Pricing

Answer 1

Setting price to break even on the costs of making and marketing a product, or setting the price to make a target return

Question 2

Cost-plus Pricing

Answer 2

Adding a standard markup to the cost of the product

Question 3

Demand Curve

Answer 3

A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged

Question 4

Price Elasticity

Answer 4

A measure of the sensitivity of demand to changes in price

Question 5

Captive Product Pricing

Answer 5

Setting a price for products that must be used along with a main product, such as blades for a razor and games for a video game console

Question 6

Market Skimming Pricing

Answer 6

Setting a high price for a new product to skim maximum revenue layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

Question 7

Market Penetration Pricing

Answer 7

Setting a low price for a new product to attract a large number of buyers and a large market share

Question 8

Allowance

Answer 8

A reduction from the list price for buyer actions such as trade-ins or promotional and sales support

Question 9

Segmented Pricing

Answer 9

Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

Question 10

Reference Pricing

Answer 10

Prices that buyers carry in their minds and refer to when they look at a given product

Question 11

Channel Conflict

Answer 11

Disagreements among marketing channel members on goals, roles, and rewards- who should do what and for what rewards.

Question 12

Disintermediation

Answer 12

The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries

Question 13

Intensive Distribution

Answer 13

Stocking the product in as many outlets as possible

Question 14

Exclusive Distribution

Answer 14

Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories

Question 15

Selective distribution

Answer 15

The use of more than one but fewer than all of the intermediaries who are willing to carry the company’s products

Question 16

Channel level

Answer 16

A layer of intermediaries that performs some work in bringing the product and it’s ownership closer to the final layer

Question 17

Channel conflict

Answer 17

Disagreements am of marketing channel members on goals, roles, and rewards-who should do what and for what rewards

Question 18

Vertical marketing system

Answer 18

A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate

Question 19

Franchise

Answer 19

A contractual vertical marketing system in which a channel member, called a franchiser, links several stages in the production-distribution process

Question 20

Horizontal marketing system

Answer 20

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

Question 21

Supply chain management

Answer 21

Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers

Question 22

Intermodal transportation

Answer 22

Combining two or more modes of transportation

Question 23

Third party logistics provider

Answer 23

An independent logistics provider that performs any or all of the functions required to get a clients product to market

Question 24

Oligopolistic competition

Answer 24

Few sellers who are sensitive to each other’s pricing/marketing strategies

Question 25

Monopolistic competition

Answer 25

Many buyers and sellers who trade over a range of prices

Question 26

Monopoly

Answer 26

Single seller

Question 27

Loss-leader

Answer 27

Strategy in which a business offers a product or service at a price that isn’t profitable to get new customers

Question 28

Predatory Pricing

Answer 28

Setting low prices to eliminate the competition

Question 29

Rebate

Answer 29

a partial refund to the customer

Question 30

Merchandising

Answer 30

The planning and promotion of sales by presenting a product to the right market at the right time, by carrying out organized, skillful advertising and using attractive displays

Question 31

Slotting Fee

Answer 31

Sum paid by a manufacturer to a retail chain for making room for a product on it’s shelves