Marketing Ch. 12

Front 1

2 main uses for price

Back 1

1.) Used as legal tender for EXCHANGE for products
2.) Used to indicate value assigned to products

Front 2

4 factors in selecting a price level

Back 2

1.) Demand
2.) Cost
3.) Profit
4.) Competition

Front 3

7 demand-based pricing tactics

Back 3

1.) Skimming
2.) Penetration
3.) Prestige
4.) Odd-Even
5.) Yield management
6.) Bundle
7.) Target

Front 4

Main consideration in cost-based pricing

Back 4

Supply-side costs

Front 5

Main consideration in profit-based pricing

Back 5

Reaching specific profit amounts

Front 6

3 competition-based pricing tactics

Back 6

1.) Customary (traditional pricing expectations)
2.) Above or below market
3.) Loss leader

Front 7

6 pricing constraints

Back 7

1.) Consumer demand
2.) Stage of product life cycle
3.) Single product versus fitting in the product line
4.) Cost of production/marketing
5.) Type of market (pure competition, monopolistic competition, oligopoly, monopoly)
6.) Competitive pricing strategies

Front 8

6 pricing objectives

Back 8

1.) Profit
2.) Sales
3.) Market share
4.) Volume
5.) Survival
6.) Social responsibility

Front 9

Indicates how much of anything consumer will buy at a certain price

Back 9

Demand curve

Front 10

4 nonprice determinants of demand

Back 10

1.) Consumer tastes (e.g. prestige)
2.) Price and availability of competitive products
3.) Consumer income
4.) Advertising/promotions

Front 11

3 variables used in estimating demand

Back 11

1.) Total potential market
2.) Total amount each member will use/buy
3.) Market share of the company

Front 12

Price elasticity of demand is high when _____.

Back 12

Price changes are directly correlated with volume (quantity sold) changes.

Front 13

2 causes of price inelasticity

Back 13

1.) No substitutes easily available
2.) Item is a necessity

Front 14

2 causes of price elasticity

Back 14

1.) Substitutes available
2.) Item not a necessity

Front 15

Difference between fixed costs and variable costs

Back 15

Fixed costs are incurred independently of volume produced, marketed, sold; whereas variable cost changes are incurred according to how much is produced, marketed, sold.

Front 16

2 ways to reduce price

Back 16

1.) Discounts (price reduction as a reward, e.g. quantity, seasonal, functional, cash)
2.) Allowances (price reductions for activities, e.g. trade-ins, promotions)

Front 17

5 legal issues associated with pricing

Back 17

1.) Price fixing
2.) Price discrimination
3.) Geographic discrimination
4.) Predatory pricing
5.) Deceptive practices (e.g. bait-and-switch)

Front 18

3 profit-oriented approaches to pricing

Back 18

1.) Target profit
2.) Target return on sales
3.) Target return on investment

Front 19

2 cost-oriented approaches to pricing

Back 19

1.) Standard markup
2.) Cost-plus

Front 20

4 circumstances under which a skimming pricing strategy is effective

Back 20

1.) There are enough prospective customers to buy immediately at the high initial price.
2.) The high initial price will not attract competitiors.
3.) Lowering price has only a minor effect on increasing sales volume and reducing unit costs.
4.) Customers interpret the high price as being high quality.

Front 21

3 circumstances under which penetration pricing is effective

Back 21

1.) Many segments of the market are price-sensitive.
2.) A low initial price discourages competitors from entering the market.
3.) Unit production and marketing costs fall dramatically as production volumes increase.