Foundations of Marketing Sixth Edition Chapter 12

Price Competition
emphasizes price as an issue and matching or beating competitor’s prices.
Non Price Competition
emphasizes factors other than price to distinguish a product from competing brands.
Pricing Objectives
goals that describe what a firm want to achieve through pricing.
Demand Curve
a graph of the quantity of products expected to be sold at various prices if other factors remain constant.
Price Elasticity of Demand
a measure of the sensitivity of demand to changes in price.
Fixed Costs
costs that do not vary with changes in the number of units produced or sold.
Average Fixed Cost
the fixed cost per united produced.
Variable Costs
costs that vary directly with changes in the number of units produced or sold.
Average Variable Cost
the variable cost per unit produced.
Total Cost
the sum of average fixed and average variable costs times the quantity produced.
Average Total Cost
the sum of the average fixed cost and the average variable cost.
Marginal Cost
the extra cost incurred by producing one more unit of a product.
Marginal Revenue
the change in total revenue resulting from the sale of an additional unit of a product.
Break Even Point
the point at which the costs of producing a product equal the revenue made from selling the product.
Cost Based Pricing
adding a dollar amount or percentage to the cost of the product.
Cost Plus Pricing
adding a specified dollar amount or percentage to the seller’s cost.
Markup Pricing
adding to the cost of the product a predetermined percentage of that cost.
Demand Based Pricing
pricing based on the level of demand for the product.
Competition Based Pricing
pricing influenced primarily by competitor’s prices.
Price Skimming
charging the highest possible price that buyers who most desire the product will pay.
Penetration Pricing
setting prices below those of competing brands to penetrate a market and gain a significant market share quickly.
Differential Pricing
charging different prices to different buyers for the same quality and quantity of product.
Negotiated Pricing
establishing a final price through bargaining between seller and customer.
Secondary Market Pricing
setting one price for the primary target market and a different price for another market.
Periodic Discounting
temporary reduction of prices on a patterned or systematic basis.
Random Discounting
temporary reduction of prices on an unsystematic basis.
Odd Numbered Pricing
the strategy of setting prices using odd numbers that are slightly below whole-dollar amounts.
Multiple Unit Pricing
the strategy of setting a single price for two or more units.
Reference Pricing
pricing a product at a moderate level and positioning it next to a more expensive model or brand.
Bundle Pricing
packaging together two or more complementary products and selling them for a single price.
Everyday Low Prices
setting a low price for products on a consistent basis.
Customary Pricing
pricing on the basis of tradition.
Captive Pricing
pricing the basic product in a product line low, but pricing related items at a higher level.
Premium Pricing
pricing the highest-quality or most versatile products higher than other models in the product line.
Price Lining
the strategy of selling goods only at certain predetermined prices that reflect definite price breaks.
Price Leaders
products priced below the usual markup, near cost, or below cost.
Special Event Pricing
advertised sales or price cutting linked to a holiday, season, or event.
Comparison Discounting
setting a price at a specific level and comparing it with a higher price.
Geographic Pricing
reductions for transportation and other costs related to the physical distance between buyer and seller.
Transfer Pricing
prices charged in sales between an organization’s units.
Discount
a deduction from the price of an item.