Chapter 11 Mkt 230

Front 1

Price

Back 1

The assignment of value or the amount the customers must exchange to receive the offering

Front 2

How important are good pricing decisions?

Back 2

Most customers rank a "resonable price" (fair or affordable) as the most

Front 3

Steps in the Price Planning

Back 3

1. Developing Price Objectives
2. Estimate Demand
3. Determine Costs
4. Evaluate the Pricing Environment
5. Choose a pricing strategy
6. Develp pricing tactics

Front 4

Most important step of Price planning

Back 4

Developing Price Objectives--wherein one determine the pricing objective BEFORE extablishing a price

Front 5

How can marketers influence the nature of the demand curve?

Back 5

By shifting it upwards

Front 6

The effect of an upwards shift in a demand curve is...

Back 6

to increase quantity demand for a given price

Front 7

Acceleration Principle

Back 7

Principle that holds that a small change in consumer demand for a product can result in a large change in the demand for org goods and services to produce the product

Front 8

Elastic Demand

Back 8

Demand in which changes in price have large effects on the amount demanded--Lesuire, activities, vacations

Front 9

Interpretation of Price Elasticity of Demand

Back 9

if the calculated price elasticity is greater than 1, demand is elastic

Front 10

Variable Costs

Back 10

The cots of production (raw and processed materials, parts and labor) that are tied to and vary depending on the number of units produced

Front 11

Fixed Costs

Back 11

Costs of production that do not change with the number of units produced (costs of owning and maintaining the factory, utilities, equipment costs, salaries of firm executives)

Front 12

Break-Even Point

Back 12

point at which the total revenue and total costs are equal and beyond which the company makes a profit: below that point the firm will suffer a loss

Front 13

Profit is maximized at what point?

Back 13

marginal cost is exactly equal to marginal revenue

Front 14

Everyday low pricing (EDLP)

Back 14

form of pricing based on customer needs

Front 15

The size of the basket

Back 15

key to building business and the EDLP stores have certainly achieved this more effectively than those retailers pursuing a Hi/Low Strategy
*The answer is EDLP

Front 16

Penetration Pricing

Back 16

Pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it.--this is often used to discourage competitors from entering the marketplace--here penetration pricing acts as a barrier to entry

Front 17

Two-Part Pricing requires

Back 17

2 seperate types of payments to purchase the product

EX: ISU's recreating venter requires an annual user fee PLUS a court fee for racquetball

Front 18

Price Bundling

Back 18

Selling two or more goods or services as a single package for one price
EX: all you can eat restaurant specials--Model packages for automobiles, TV services

Front 19

F.O.B. Origin Pricing

Back 19

pricing tactic in which the cost of transporting the product from the factory to the customer's location is the responsibility of the customer

Front 20

F.O.B. Delivered Pricing

Back 20

pricing tactic in which the cost of transporting the product from the factory to the customer's location is included in the selling price and is paid by the manufacturer

Front 21

Basing-Point Pricing

Back 21

pricing tactic where customer pay shipping charges from set basing point locations whether the goods are actually shipped from these points or not

Front 22

Uniform Delivered Pricing

Back 22

pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location

Front 23

Freight Absorption Pricing

Back 23

pricing tactic in which the seller absorbs the total cost of transportation

Front 24

Forms of Distribution-based pricing

Back 24

FOB Origin Pricing, FOB Delivered Pricing, Basing-Point Pricing, Uniform Delivered Pricing, Freight Absorption Pricing

*"Price Bundling" is not one of these

Front 25

Cash Discounts

Back 25

Enticing customers to pay their bills quickly

EX: "2% 10 days, net 30 days means that the amount due is 2% less IF the bill is paid within 10 days, and the bill is due in 30 days regardless

Front 26

Internal Reference Prices- Psychological Issues in pricing

Back 26

set price or a price range in consumers' minds that they refer to in evaluating a product's price

Front 27

Assimilation--Internal Reference prices

Back 27

effects occurs when two equal (substitute) products involve the same internal reference points

Front 28

Contrast effects--Internal Reference Prices

Back 28

occur when two products are far apart (big quality differences). You need contrast to occur to support higher prices when compared to competitice products

Front 29

Price Lining

Back 29

practice of setting a limited number or different specific prices, called price points, for the items in a product line

Front 30

Price Points

Back 30

prices for which demand is relatively high

Front 31

Ball-and-Switch

Back 31

an illegal marketing practice in which an advertised price special is used to as ball to get customers into the store with the intention of switching them to a higher-priced item--Here there is never an intention to sell the ball item (ex- Circuit City and Great Lakes)

Front 32

Predatory pricing

Back 32

a company sets a very low price for the purpose of driving competitors out of business

Front 33

In the Article "The Price is Unfair! A Conceptual Framework of Price Fairness Perceptions"

Back 33

we define price fairness as a consumer's assessment and associated emotions of whether the difference (or lack of difference) between a seller's price and the price of a comparative other party is reasonable, acceptable or justifiable.