Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

43 Cards in this Set

  • Front
  • Back
What are the 4 steps to setting the right price on a product or service?
1) Establish pricing goals
2) Estimate demand, costs, and profits
3) Choose a price strategy
4) Fine tune w/ pricing tactics
Charging a price identical to or very close to the competition's price:
Status quo pricing
An agreement between two or more firms on the price they will charge for a product:
Price fixing
What 3 tactics are used for fine-tuning the base price?
1) Discounts
2) Geographic pricing
3) Special pricing tactics
Strategy in which a firm charges a high introductory price, often coupled w/ heavy promotion:
Price Skimming
What are the 4 strategies used by suppliers during a recession?
1) Renegotiating contracts
2) Offering help
3) Keeping the pressure on
4) Paring down suppliers
The use of discounts by salespeople to increase demand for one or more products in a line:
Price Shading
Laws that prohibit wholesalers and retailers from selling below cost:
Unfair Trade Practices
What 2 pricing tactics are using when the economy experiences high inflation?
1) Cost-oriented tactics
2) Demand-oriented tactics
In what 2 instances will businesses impose consumer penalties?
1) An irrevocable loss of revenue is suffered
2) Additional transaction costs are incurred
Setting the price at a level that seems to the customer to be a good price compared to the prices of other options:
Value-based pricing
What are the 2 effective pricing tactics to hold or build market share during a recession?
1) Value-based pricing
2) Bundling or unbundling
The practice of charging a very low price for a product w/ the intent of driving competitors out of the market:
Predatory Pricing
Strategy in which a firm charges a relatively low price for a product initially as a way to reach the mass market:
Penetration Pricing
What are 4 strategies to make demand more inelastic?
1) Cultivate selected demand
2) Create unique offerings
3) Change the package design
4) Heighten buyer dependence
Setting prices for an entire line of products:
Product line pricing
What are the 3 Robinson-Patman Act of 1936 defenses that can be used when a seller has been charged w/ price discrimination?
1) Cost
2) Market conditions
3) Competition
A basic, long-term pricing framework, which establishes the initial price for a product and the intended direction for price movements over the product life cycle:
Price Strategy
Costs that are shared in the manufacturing and marketing of several products in a product line:
Joint costs
Hair Works is located across the street from another hair salon. For weeks, the two businesses have been in a price war. When the Hair Works decreases its price for a haircut, its competitor does the same. This is an example of:
Status quo pricing
A manufacturer sells its line of cleaning products to several large discount retailers but gives special discounts to its biggest customer. The manufacturer is practicing:
Price discrimination
The U.S. Department of Justice charged Samsung, Hynix Semiconductor Inc., Infineon Technologies AG, and Micron Technology Inc. with conspiring to set prices for computer memory between 1999 and 2002. This means the companies engaged in _____.
Price fixing
The marketing manager of (a Web travel site targeted to consumers who want a luxury vacation) finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during the month of December. The vice-president of finance, however, is committed to reporting a 25 percent return on investment at all times. This conflict illustrates:
The need for trade-offs in pricing objectives
The Raver-Smythe Corporation (RSC) has introduced mylar-based artificial fingernails. It earns a low profit margin on the sale of each box of its new fingernails and is still able to meet its revenue objectives due to economies of scale. RSC is using a(n)_____ policy.
Penetration pricing
Macy's department stores ran an ad that featured Lenox china. Macy's probably received a ________ from the makers of Lenox china.
Trade allowance
When a new airline starts offering low-cost service in Atlanta, a well-established airline drops its prices so low that the new airline is forced to go out of business within a few months. The well-established airline has practiced _____.
Predatory pricing
When innovations--such as flat-screen plasma televisions--are first launched into the market, they normally use a ________ strategy since there are no direct competitors.
Price skimming
You are thinking about going on a vacation to Las Vegas and found a good package that includes three nights at the Bellagio, tickets to two shows, and dinner every night for a single price. This is an example of _____.
Price bundling
Walgreen's receives a 15 percent allowance from a hair coloring brand for running an ad for the brand in the drugstore's weekly circular. This is an example of a:
Promotional allowance
"The customer is our enemy; the competitor is our friend." According to an FBI mole, that used to be the unofficial world-view of Archer Daniels Midland (ADM), a $11 billion company that specializes in agricultural and horticultural products. Given this information, what illegal pricing practices would ADM have been most likely to engage in?
Price fixing
Standard shipping costs for the Savannah Candy Company are $6.95 for up to $30 worth of merchandise, $9.95 for merchandise between $30.01 and $60, $11.95 for merchandise between $60.01 and $90, and 10 percent of the product value for all merchandise over $90.01. What geographic pricing method is the Savannah Candy Company using?
Uniform delivered pricing
The Two-Bit Candy Store is a small retail establishment where all candies are sold for 25 cents per piece, regardless of the candy type or size. This pricing method is known as:
A single-price tactic
You are getting ready to buy a new car, and you spend several hours at the dealership, haggling about price. Finally, you and the car salesperson agree on a price that is 10 percent lower than the MSRP. What is the name of the pricing policy used for granting this discount?
Flexible pricing
At the Sports Stop, there are tennis rackets priced at $50, $75, $90, $125, and $250. The Sports Stop has chosen this price line structure because it will:
Reach several different target market segments.
Ralph's Supermarket is running a Halloween special on pumpkins, which customers can buy for fifteen cents a pound. The supermarket will take a loss on the pumpkins but hopes that customers will purchase other items. This is an example of:
Leader pricing
The JetPak Skydiving club charges each member a $50 membership fee in addition to the $35 charged for each jump the member makes. This is an example of what kind of pricing tactic?
Two-part pricing
During a recent worldwide recession when wine usage was declining, Nickel and Nickel launched a new brand of wine, which they sold at $125 a bottle. The wine is allowed to age three times as long as lower priced wines, and the grapes used in the wine's production are hand-picked. Wine lovers appreciate how both production techniques improve wine quality. Nickel and Nickel used ________ to build market share.
Value-based pricing
Engineered Fabrics is writing up a contract with the U.S. Department of Defense for a system that will prevent gasoline tanks in airplanes from exploding in the event of a crash. What pricing policy should it use?
Escalator pricing
The salespeople at Franklin Printers routinely use discounts to increase demand for one or more products in a line, especially during times of inflation when customers are more price sensitive. This practice is called:
Price shading
What is the opposite of price skimming?
Penetration pricing
It makes the most sense to use _____ as a price policy when demand is relatively inelastic in the upper ranges of the demand curve.
Price skimming
A price reduction for buying merchandise out of season:
Seasonal discount
Pricing high in order to capitalize on a product's uniqueness:
Price skimming