Chapter 14: Arriving At The Final Price

Front 1

setting the highest initial price thatcustomers really desiring the product are willing to pay as the demand of these customers is satisfied the firm lowers the price to attract another; used mostly when introducting a new or innovative product

Back 1

skimming price

Front 2

settting a low initial price on a new product to appeal immediately to the mass market

Back 2

penetration pricing

Front 3

involves setting a high price so that quality- or status-concious consumers will be attracted to the product and buy it

Back 3

prestige pricing

Front 4

often a firm that is selling not just a single product but a line of products may price them at a number of different specific pricing points

Back 4

price lining

Front 5

involves setting prices a few dollars or cents under an even number

Back 5

odd-even pricing

Front 6

results in the manufacturer deliberately adjusting the composition and featurs of a product to achieve the target price to consumers

Back 6

target pricing

Front 7

the marketing of two or more products ina single package prie; frequently used demand-oriented pricing practice

Back 7

bundle pricing

Front 8

the charging of different prices to maximize revenue for a set amount of capacity at any given time

Back 8

yield management pricing

Front 9

entails addinga fixed percentage to the cost of all items in a specific product class

Back 9

standard markup pricing

Front 10

involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price

Back 10

cost-plus pricing

Front 11

a fixed percentage is added to the total unit cost

Back 11

cost-plus-percentage-of-cost pricing

Front 12

a 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 independent of the final cost of the project

Back 12

cost-plus fixed-fee pricing

Front 13

based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm's experience at producing a selling them doubles

Back 13

experience curve pricing

Front 14

a firm may set an annual target of a specific dollar volume of profit

Back 14

target profit pricing

Front 15

to set typical prices that will give them a profit that is specified percentage of the sales volume

Back 15

target return-on-sales pricing

Front 16

a method of setting prices to achieve this target

Back 16

target return-on-invsetment pricing

Front 17

for some products where tradition, a standardized channel of distribution, or other competitive factors dictate the price

Back 17

customary pricing

Front 18

purpose is to not increase sales but to attract customers in hopes they will buy otherproducts as well, particularly, the discretionary items with large markups

Back 18

loss-leader pricing

Front 19

also called fixed pricing, is setting one price for all buyers of a product or service

Back 19

one-price policy

Front 20

also called dynamic pricing, involves setting different prices for products and services depending on individual buyers and purchase situations

Back 20

flexible-price policy

Front 21

involves a continuing, concise trade-off of incremental costs against incremental revenues

Back 21

marginal analysis

Front 22

reductions from the list price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller

Back 22

discounts

Front 23

reductions in unit costs for a larger order

Back 23

quantity discounts

Front 24

based on size of an individual purchase order. they encourage large individual purchase orders, not a series of orders

Back 24

noncumulative quantity discounts

Front 25

apply to the accumulation of purchases of a product over a given time period, typically a year; encourage repeat buying by a single customer

Back 25

cumulative quantity discounts

Front 26

reductions off the list or base price are offered to resellers in the channel of distribution on the basis of (1) where they are in the channel (2) the marketing activities they are expected to perform in the future

Back 26

trade or functional discounts

Front 27

to encourage retailers to pay their bills quickly

Back 27

cash discounts

Front 28

reductions from list or quote prices to buyers for performing some acitivity

Back 28

allowances

Front 29

a price reduction given when a used product is part of the payment on a new product

Back 29

trade-in allowance

Front 30

undertaking certain advertising or selling activities to promote a product

Back 30

promotional allowances

Front 31

the practice of replacing promotional allowances with lower manugacturer list prices; promises to reduce average price to consumers while minimizing promotional allowances that cost manufacturers billions of dollars every year

Back 31

everyday low pricing

Front 32

usualyl invovles the seller's naming the location of this loading as the seller's factory or warehouse

Back 32

FOB origin pricing

Front 33

method is used the price the seller quotes includes all transportation costs

Back 33

uniform delivered pricing

Front 34

all buyers pay the same deliverd price for products, regardless of their distrance from the seller

Back 34

single-zone pricing aka postage stamp pricing

Front 35

a firm divides its selling territory into geographic areas or zones

Back 35

multiple-zone pricing

Front 36

the buyer is allowed to deduct the freight expenses from the lsit price oft he goods, so the seller agrees to pay or "absorb" the transportation costs

Back 36

freight-allowe pricing also called freight absorption pricing

Front 37

involves selcting one or more geographical locations from which the list price for products plus freigh expenses are charged to the buyer

Back 37

basing-point pricing

Front 38

a conspiracy among firms for a product; illegal under the Sherman Act

Back 38

price fixing

Front 39

when two or more competitors explicity or implicily set prices

Back 39

horizontal price fixing

Front 40

involves controlling agreements between independent buyers and sellers (a manufacturer and a retailer) whereby sellers are reqruired to not sell products below minimum retail price

Back 40

vertical price fixing

Front 41

this rule holds that circumstances surrounding a practice must be considered before making a judgment about is legality.

Back 41

the rule of reason

Front 42

the practice of charging different prices to different buyers for goods of like grade and quality; prohibited by Robinson-Patman Act

Back 42

price discrimination

Front 43

when price differences charged tod ifferent customers do not exceed the differences in cost of manufacture, sale, or delivery resulting from differing methods or quanitties in which such goods are sold or delivered to buyers

Back 43

cost justification defense

Front 44

when price differences are quoted to selected buyers in good faith to meet competitors' prices and are not intended to injure competition.

Back 44

meet-the-competition defense

Front 45

price deals that mislead customers

Back 45

deceptive pricing

Front 46

the practice of charging a very low price for a product with the intent of driving competitors out of business. once competitors have been driven out, the firm raises its prices

Back 46

predatory pricing