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52 Cards in this Set

  • Front
  • Back
What is price to the seller?
-Profit source
Revenue minus expenses:
What are some market trends that influence price?
-Flood of new products
-Increased availability of bargain private and generic brands
-Price cutting as a strategy to maintain or regain market share
-Internet used for comparison shopping
What are the 2 sales-oriented pricing objectives?
1) Market share
2) Sales maximization
What allocates resources in a free-market economy?
What are the 3 different types of pricing objectives?
1) Profit-Oriented
2) Sales-Oriented
3) Status Quo
The price charged to customers multiplied by the number of units sold:
What is price to the consumer?
Price is the cost of something
A company’s product sales as a percentage of total sales for that industry:
Market share
What may be used to sell off excess inventory?
Sales maximization
Setting prices so that total revenue is as large as possible relative to total costs:
Profit Maximization
What are the 3 profit-oriented pricing objectives?
1) Profit maximization
2) Satisfactory profits
3) Target return on investment
That which is given up in an exchange to acquire a good or service:
The quantity of a product that will be sold in the market at various prices for a specified period:
A technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity:
Yield Management Systems
What are the 4 methods used to set prices?
1) Markup pricing
2) Keystoning
3) Profit maximization pricing
4) Break-even pricing
What is a short-term objective to maximize sales?
Sales maximization
Consumers’ responsiveness or sensitivity to changes in price:
Elasticity of demand
What are the 2 status quo pricing objectives?
1) Maintain existing prices
2) Meet competition's prices
The cost of buying the product from the producer plus amounts for profit and for expenses not otherwise accounted for:
Markup pricing
Costs that vary with changes in level of output:
Variable costs
What pricing objective ignores profits, competition, and the marketing environment?
Sales maximization
The practice of marking up prices by 100%, or doubling the cost:
The price at which demand and supply are equal:
Price equilibrium
What 5 factors affect elasticity of demand?
1) Availability of substitutes
2) Price relative to purchasing power
3) Product durability
4) Product’s other uses
5) Rate of inflation
The quantity of a product that will be offered to the market by a supplier at various prices for a specific period:
What impact has the Internet had on price?
-Product selection
-Second opinions from expert sites
-Shopping bots
-Internet auctions
An increase or decrease in price will not significantly affect demand:
Inelastic demand
What can lead to price wars?
A method of setting prices that occurs when marginal revenue equals marginal cost:
Profit maximization
Costs that do not change as level of output changes:
Fixed costs
Occurs when consumers buy more or less of a product when the price changes:
Elastic Demand
Charging a high price to help promote a high-quality image:
Prestige pricing
Stocking well-known branded items at high prices in order to sell store brands at discounted prices:
Selling against the brand
What are 3 common techniques used by yield management systems?
1) Discounting early purchases
2) Limiting early sales at discounted prices
3) Overbooking capacity
What may induce firms to enter the market?
High prices
An increase in sales exactly offsets a decrease in prices, and revenue is unchanged:
Unitary elasticity
The extra revenue associated with selling an extra unit of output, or the change in total revenue with a one-unit change in output:
Marginal revenue
What may force firms to lower their prices?
Global competition
When Wal-Mart regional managers conduct store visits, they also shop at nearby Target and Kmart stores. The managers compare prices on a selection of items and make adjustments to Wal-Mart's prices when necessary. This is an example of:
Status quo pricing
The local utility company has raised rates once again, yet demand doesn't seem to decrease much at all. This is an example of:
Inelastic demand
Grove City Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Frankie Alonza, its owner, does not have the cash to pay the current loan installment due on the building and inventory. Alonza has decided to reduce all merchandise prices by at least 50 percent for a weekend sale so he can earn enough to pay his loan payment. His pricing objective can be classified as:
Sales maximization
To increase lottery sales, the State of Georgia started a game called The Change Game in which participants purchased lottery tickets with the change left over from a store purchase. The Change Game lottery tickets can be purchased for between $.25 and $.99. By lowering prices, the commission that runs Georgia's lottery program hoped to increase lottery ticket sales. The members of the commission undoubtedly believe the demand for lottery tickets is:
A new cell phone service is pricing its full-color, multi-functional cell phone at a very low price with the hope of gaining immediate sales at its introduction. This pricing objective is based on:
Increasing market share
An antique mall has a pricing policy of setting prices so that the retail price is as high as the market will tolerate. However, the company constantly strives to keep costs at an industry low. The pricing policy is best described as:
Status quo pricing
Ben's Bagel Company used to price its bagels at 25¢ each. At this price, the company sold an average of 5,000 bagels per day. The company recently decided to double its price to 50¢, and the company watched its demand fall to 1,500 per day. The demand for bagels is most likely:
When Sweet Confections manufactures 1,000 jars of mint jelly the cost of the decorative labels that go on the jars is $14. When output is raised to 2,500 jars, the cost of the labels increases to $35. The cost of the labels is an example of a(n):
Variable cost
Kroger supermarkets will place well-known brands on the shelves at high prices while offering its own Kroger brand at lower prices. This practice is an example of:
Selling against the brand
Garrett Select Industries has lowered the price of its all-natural oven mitts from $6 to $5. It previously sold 300 oven mitts per month and now sells 360 per month. It is experiencing:
Unitary elasticity
What is the most common pricing objective used by firms?
Target return on investment (ROI)
What is one of the most common pricing methods used by intermediaries?
Markup pricing
What determines the sales volume that must be reached for a product before a company's total revenue equals total costs?
Break-even analysis