Mrkt 341 Chapter 9

Front 1

Price

Back 1

The amount of money charged for a product or service or the sum of all the values that customers give up in order to gain the benefits of having or using a product or service.

Front 2

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 just 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 market offering and support higher prices, rather than cutting prices to match competitors.

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 its effort and risk.

Front 6

Fixed costs

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

Back 9

Adding a standard markup to the cost of the product.

Front 10

Break-even pricing (target profit pricing)

Back 10

Setting price to break even on the costs of making and marketing a product; or setting price to make a target profit.

Front 11

Target costing

Back 11

Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.

Front 12

Demand curve

Back 12

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 13

Price elasticity

Back 13

A measure of the sensitivity of demand to changes in price.

Front 14

Market-skimming pricing (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 in order to attract a large number of buyers and a large market share.

Front 16

Product line pricing

Back 16

Setting the price steps between products in a product line based on cost differences and customer perceptions of the value.

Front 17

Optional-product pricing

Back 17

The pricing of optional or accessory products along with a main product.

Front 18

Captive-product pricing

Back 18

Setting a price for products that must be used along with a main product.

Front 19

By-product pricing

Back 19

Setting a price for by-products in order 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 reduction in price on purchases under stated conditions or during a stated period of time.

Front 22

Allowance

Back 22

Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

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

A pricing approach that considers the psychology of prices and not simply the economics; the price is used to say 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

Geographical pricing

Back 27

Setting price based on the buyer's geographic location.

Front 28

Dynamic pricing

Back 28

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