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13 Cards in this Set

  • Front
  • Back
4 Bases for Setting Price Level
8 Types of Demand Oriented Approaches
Skimming Pricing – The highest initial price that customers really desiring the product are willing to pay.

Penetration Pricing -Setting a low initial price on a new product to appeal immediately to the mass market.

Prestige Pricing - Setting a high price so that status-conscious consumers will be attracted to the product and buy it.

Price Lining - Setting the price of a line of products at a number of different specific pricing points.

Odd-Even Pricing - Setting prices a few dollars or cents under an even number, such at $19.95.

Target Pricing - Manufacturer deliberately adjusting the composition and features of a product to achieve the target price to consumers.

Bundle Pricing - The marketing of two or more products in a single “package” price.

Yield Management Pricing - The charging of different prices to maximize revenue for a set amount of capacity at any given time.
3 Types of Cost Oriented Approaches
Standard Markup Pricing- Adding a fixed percentage to the cost of all items in a specific product class.

Cost-plus pricing- The practice of summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.

Experience curve pricing - A method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm’s experience at producing and selling them doubles.
3 Types of Profit Oriented Approaches
Target Profit Pricing - Setting an annual target of a specific dollar volume of profit.

Target Return-on-sales pricing - Setting a price to achieve a profit that is a specified percentage of the sales volume.

Target return on investment pricing - Setting a price to achieve a return-on-investment (ROI) target.
3 Types of Competition Oriented Approaches
Customary pricing - A method of pricing based on tradition, a standardized channel of distribution, or other competitive factors.

Above, At, or Below market pricing - Pricing based on market price

Loss Leader Pricing - Deliberately selling a product below its customary price to attract attention to it.
4 Types of Discounts
-Quantity discounts - Reductions in unit costs for a larger order.

-Seasonal discounts – offers discounts to people who buy snow blowers in July and August

-Trade (functional) discounts – to reward wholesalers and retailers for marketing functions the will perform in the future

-Cash discounts – if payment is made within 10 days, 2% discount
3 Types of Allowances
-Trade in allowances – price reduction given when a used product is part of the payment on a new product

-Promotional allowances - Cash payment or extra amount of “free goods” awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product.

-Everyday Low Pricing -
(1) The practice or replacing promotional allowances with lower manufacturer list prices.
(2) Retail strategy that emphasizes consistently low prices and eliminates most markdowns
3 Types of Geographical Adjustments
-FOB origin pricing - A method of pricing where the title of goods passes to the buyer at the point of loading.

-Uniform Delivered Pricing - The price the seller quotes includes all transportation costs.

-Basing Point Pricing - Selecting one or more geographic locations (basing point) from which the list price for products plus freight expenses are charged to buyers.
Price Fixing
A conspiracy among firms to set prices for a product
Price Discrimination
The practice of charging different prices to different buyers for goods of like trade and quality.
Deceptive Pricing
price deals that mislead consumers.
Geographical pricing
– Basing point pricing can be viewed as illegal if there is clear-cut evidence of a conspiracy to set prices
Predatory pricing
Charging a very low price for a product with the intent of driving competitors out of business.