Marketing: An Introduction Chapter 10

Front 1

price

Back 1

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

Front 2

cost based pricing

Back 2

design a product>determine costs>set price based on cost>convince buyers of its value

Front 3

value-based pricing

Back 3

assess customer needs and value perceptions>set target price to match customer perceived value>determine costs that can be incurred>design product to deliver desired value at target price

Front 4

customer value-based pricing

Back 4

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

Front 5

good-value pricing

Back 5

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

Front 6

value-added pricing

Back 6

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

Front 7

cost-based pricing

Back 7

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

Front 8

cost-plus pricing (or markup pricing)

Back 8

adding a standard markup to the cost of the product

Front 9

break-even pricing (or target return pricing)

Back 9

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

Front 10

breakeven volume formula

Back 10

breakeven volume =fixed costs /(selling price-variable costs)

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

pure competition

Back 13

market consists of many buyers and sellers trading in a uniform commodity like wheat, copper, or financial securities. no single buyer has much effect on the going market price.

Front 14

monopolistic competition

Back 14

market consists of many buyers and sellers who trade over a range of prices rather than a single market price.

Front 15

oligopolistic competition

Back 15

market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies.

Front 16

pure monopoly

Back 16

market consists of one seller.

Front 17

demand curve

Back 17

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

Front 18

price elasticity

Back 18

a measure of the sensitivity of demand to changes in price

Front 19

1. inelastic demand

2.elastic demand

Back 19

1. demand hardly changes with a small change in price.

2. demand changes greatly with a small change in price.

Front 20

market-skimming pricing (or price skimming)

Back 20

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

Front 21

market-penetration pricing

Back 21

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

Front 22

product line pricing

Back 22

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. for example, turbo tax offers multiple versions of its software and at different prices

Front 23

optional-product

Back 23

the pricing of optional or accessory products along with a main product. Like buying a navigation system with a car

Front 24

captive-product pricing

Back 24

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. Producers of the main products like razors, often price them low and set high markups on the supplies.

Front 25

two-part pricing

Back 25

a fixed fee plus a variable usage rate. like at amusement parks, you pay the daily-ticket price plus additional fees for food.

Front 26

by-product pricing

Back 26

setting a price for by=products to make the main product's price more competitive. Like when mills use even the wood chips to make OSB or paper.

Front 27

product bundle pricing

Back 27

combining several products and offering the bundle at a reduced price.

Front 28

allowance

Back 28

promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way. like trade-in allowances or promotional allowances

Front 29

segmented pricing

Back 29

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

Front 30

customer-segment pricing

Back 30

different customers pay different price for the same product or service. For example, student rate, senior rate, youth rate, and adult rate.

Front 31

product-form pricing

Back 31

different versions of the product are priced differently but not according to differences in their costs . for example, business class vs economy class

Front 32

locaton-based pricing

Back 32

different prices for different locations, even though cost of offering each location is the same. for example, theatres vary their seat prices because of audience preferences for certain locations.

Front 33

time-based pricing

Back 33

a firm varies its price by the season, the month, day or hour. for example, matinee movies, vs regular show times at night

Front 34

psychological pricing

Back 34

pricing that considers the psychology of prices and not simply the economcies. the price is used to say something about the product. For example, a bottle of perfume that costs $3 to make sells for $100 so that consumers think its special

Front 35

reference prices

Back 35

prices that buyers carry in their minds and refer to when they look at a give product. for example, displaying a product next to more expensive ones to imply that it belongs in the same class.

Front 36

promotional pricing

Back 36

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

Front 37

geographical pricing

Back 37

setting prices for customers located in different parts of the country or world.

Front 38

FOB origin pricing

Back 38

goods are placed free on board a carrier. title and responsibility pass to the customer who pays for the freight from factory to destination.

Front 39

uniform-delivered pricing

Back 39

company charges same price plus freight to all customers, regardless of location. For example, freight going to vancouver from Seattle will cost $150. Freight going to toronto from seattle will also cost $150.

Front 40

zone pricing

Back 40

company sets up zones, and all customers within a certain zone pay a single certain price. like bus zones in vancouver

Front 41

dynamic pricing (real-time pricing)

Back 41

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

Front 42

fixed price policies

Back 42

setting one price for all buyers

Front 43

price escalation

Back 43

a pair of levis that costs $50 in Canada might cost $150 in Tokyo

Front 44

low-price fighter brand

Back 44

adding a lower-price item to the line or creating a separate lower-price brand. Koodo would be the fighter brand for Telus.

Front 45

public policy issues in pricing

Back 45

-price fixing : sellers must set prices without talking to competitors

-predatory pricing:selling below cost with the intention of punishing the competitor

-bid rigging

Front 46

price discrimination

Back 46

when a retailer does not get the same price terms from a given manufacturer as another company.

Front 47

functional discounts

Back 47

offering a larger discount to wholesalers than to retialers

Front 48

retail(resale) price maintenance

Back 48

a manufacturer can't require dealers to charge a specified retail price for its product.

Front 49

deceptive pricing

Back 49

(bait and switch) for example, advertising a product at a low price, carry very limited stock, and then tell consumers they are out of the product so that they can entice them to switch to a higher-priced item.