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40 Cards in this Set

  • Front
  • Back
skimming pricing
set the highest initial price that customers are willing to pay
effective when:
-enough prospective buyers are willing to buy immed at high initial price
-high price will not attract competitiors
-lowering price has only minor effect on increasing sales volumeand reducing the unit costs
-customers interpret the high price = high quality
penetration pricing
low intial price
-many segments of market are price sensitive
-low initial price discourages competitors
-unit production and marketing prices fall dramatically as production vol increases
prestige pricing
setting high price so that quality shoppers will be attracts to the product and buy it
goal is to stay above initial price
price lining
price a number of diff products at diff points; demand is elastic at all price points but inelastic btwn
odd-even pricing
setting prices a few $$ or cents under an even number
target pricing
estimate price consumer will pay and work backward through markups to det price can charge wholesales for the product
bundle pricing
marketing of two or more products in a single package price (airlines)
lower TC to buyers and lower marketing costs to sellers
yield mgmt pricing
charging of diff prices to max rev for a set amount of capacity at any given time
cont. matches supply and demand to customize price for a service
standard markup pricing
adding a fixed % to the cost of all items in a specific product class
markups must cover all exp for the store, pay for overhead costs, and contribute to profits
cost-plus pricing
summing the TUC of providing a p/service and adding a specific amt to the cost to arrive at a price
cost-plus-percentage-of-cost pricing
fixed % is added to total UC; price one/few of a kind items
Cost puls fixed fee pricing
supplier is reimbursed for all costs, regardless of what they turn out to be, but is allowed only a fixed fee as profit that is indep of that final cost of the project
experience curve pricing
learning effect; can lead to decline in price as cumulative sales vol grows
target profit pricing
annual target of a specific $ vol of profit
target return on sales pricing
set typical prices taht will give them a profit that is a specified %
TR on sales = Tprofit/TR
target return on investment pricing
setting prices to acheive target
customary pricing
tradition, a standardized channel of distribution, or other competitive factors dictate the price
above, at, or below market pricing
when have subjective feel about competitor's price or market price
loss leader pricing
delib sell product below its customary price to attract customers in hopes that they will buy other products
one price policy
fixed pricing; setting one price for all
flexible price policy
dynamic pricing
involves setting diff prices for products and services depending on indiv buyers and purchase situations
-prevalent online
product line pricing
setting of prices for all items in a product line
-lowerst priced product and price
-highest priced product and price
-price differentials for all other products in line
differntials should get larger as move up the line
price war
successive price cutting by competitors to increase or maintain their unit sales/market share
only when:
-company has cost/tech advantage over competitors
-primary demand for a product class will grow if prices are lowered
-cut is confined to specific products/customers
quantity discounts
reductions in unit costs for a larger order
noncumulative - based upon size of order
cumulative - accum of purchases over a pd of time
trade/functional discounts
reductions off list/base price are offereed to resellers in the channel of dist on the basis of
-where they are in the channel
-marketing activities they are expected to perform in the future
cash discounts
encourage to pay bills quickly
reductions from list/quoted prices to buyers for performing some activity
trade-in - used product is part of the pmt on a new product
promotional allowances
undertaking certain ad or selling activities to promote a product
FOB origin pricing
free on board
seller pays the cost of loading the product
title to goods passes to buyer at point of loading
uniform delivered pricing
price includes transportation costs
FOB buyer's location
title passes to buyer after transportation
single zone pricing
all buyers pay same delivered price for the products
postage stamp pricing
multiple zone pricing
firm divided its selling territory into geographic areas; price varies depending on zone
FOB with freight allowed/absorbed pricing
seller pays/absorbs transportation costs
basing point pricing
selecting one or more geographical locations (basing pt) from which the list price plus freight exp are charged to the buyer
price fixing
illegal under sherman act
horiz price fixing
when 2 or more competitors set prices
vertical price fixing
controlling agreements btwn indpe buyers and sellers whereby sellers are req to not sell products below a min retain price
resale price maintenance illegal under consumer goods pricing act
price discrimination
prohib by Clayton act
cost justification defense
price diff charged to diff customers do not exceed the diff int he cost of manufacture, sale or delivery resulting from diff methods or quantities in which such goods are sold/delivered to buyers
predatory pricing
charging a very low price for a product witht heintent of driving competitors out of business and then raising prices
illegal under Sherman act and FTC act