Chapter 9: Marketing Exam 2

Front 1

price

Back 1

the amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service

Front 2

customer-value based pricing

Back 2

setting price based on buyers' perceptions of value rather than on the seller's cost

Front 3

good-value pricing

Back 3

offering the right combination of quality and good service at a fair price

Front 4

value-added pricing

Back 4

attaching value-added features and services to differentiate a company's offers while still charging higher prices

Front 5

cost-based pricing

Back 5

setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk

Front 6

fixed costs (overhead)

Back 6

costs that do not vary with production or sales level

Front 7

variable costs

Back 7

costs that vary directly with the level of production

Front 8

total costs

Back 8

the sum of the fixed and variable costs for any given level of production

Front 9

cost-plus pricing (markup pricing)

Back 9

adding a standard markup to the cost of the product

Front 10

break-even pricing (target return pricing)

Back 10

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

Front 11

competition-based pricing

Back 11

setting prices based on competitors' strategies, prices, costs, and market offerings

Front 12

target costing

Back 12

pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met

Front 13

price elasticity

Back 13

a measure of the sensitivity of demand to changes in price

Front 14

market-skimming pricing (or price skimming)

Back 14

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

Front 15

market-penetration pricing

Back 15

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

Front 16

product line pricing

Back 16

setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices

Front 17

optional product pricing

Back 17

the pricing of optional or accessory products along with the main product

Front 18

captive product pricing

Back 18

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

Front 19

by-product pricing

Back 19

setting a price for by-products to make the main product's price more competitive

Front 20

product bundle pricing

Back 20

combining several products and offering the bundle at a reduced price

Front 21

discount

Back 21

a straight line reduction in price on purchases made during a stated period of time or in larger quantities

Front 22

allowance

Back 22

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

Front 23

segmented pricing

Back 23

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

Front 24

psychological pricing

Back 24

pricing that considers the psychology of prices, not simply the economics; the price says something about the product

Front 25

reference prices

Back 25

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

Front 26

promotional pricing

Back 26

temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

Front 27

dynamic pricing

Back 27

adjusting prices continually to meet the characteristics and needs of individual customers and situations