marketing 2101 chapter 10

price
the assignment of value, or the amount the consumer use exchange to receive the offering
Bitcoin
the most popular and fastest-growing digital currency
price elasticity of demand
the percentage change in unit sales that results from a percentage change in price
elastic demand
demand in which changes in price have large effects on the amount demanded
inelastic demand
demand in which changes in price have little or no effect on the amount demanded
cross elasticity of demand
when changes in the price of one product affect the demand for another item
variable cost
the costs of production(raw and processed materials, parts and labor) that are tied to and vary, depending on the number of units produced
fixed costs
costs of production that do not change with the number of units produced
average fixed costs
the fixed cost per unit produced
total costs
the total of the fixed costs and the variable costs for a set number of units produced
break-even analysis
a method for determining the number of units that a firm must produce and sell at a given price to cover all its costs
break-even point
the point at which the total revenue and total costs are equal and beyond which the company makes a profit, below that point the firm suffers a loss
contribution per unit
the difference between the price the firm charger for a product and the variable costs
markup
an amount added to the cost of a product to create the price at which a channel member will sell the product
gross margin
the markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a product
retailer margin
the margin added to the cost of a product by a retailer
list price
the price that the manufacturer sets as the appropriate price for the end consumer to pay
vertical integration
the combining of manufacturing operations with channels of distribution under a single ownership to reduce costs and increase profits
cost-plus pricing
a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling price
keystoning
retaining price strategy in which the relater doubles the cost of the item (100 percent markup) to determine the price
demand-based pricing
a price setting method based on estimates of demand at different prices
target costing
a process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price
yield management pricing
a practice of charging different prices to different customers to management capacity while maximizing revenues
price leadership
a pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or similar prices
high/low pricing
a retail pricing strategy in which the retailer prices merchandise at list price but runs frequent, often weekly, promotions that heavily discount some products
skimming price
a very high, premium price that a firm charges for its new, highly desirable product
penetration pricing
a pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it
trial pricing
pricing a new product low for limited period of time to lower the risk for a customer
price segmentation
the practice of charging different prices to different market segments for the same product
surge pricing
a pricing plan that raises prices of a product as demand goes up and lowers it as demand slides
bottom of the pyramid pricing
innovative pricing that will appeal to consumers with the lowest incomes by brands that wish to get a foothold in bottom of the pyramid countries
two-part pricing
pricing that requires two separate types of payments to purchase this product
payment pricing
a pricing tactic that breaks up the total price into smaller amounts payable over time
decoy pricing
a pricing strategy where a seller offers at least three similar products, two have comparable but more expensive prices and one of these two is less attractive to buyers, thus causing more buyers to buy the higher priced more attractive item
price bundling
selling two or more goods or services as as single package for one price
captive pricing
a pricing tactic for two items that must be used together; one item in priced very low and the firm makes it profit on the other,, high-margin item essential to the cooperation of the first item
FOB delivered pricing
a pricing tactic in which the cost of loading and transpiring the product to the customer is included in the selling price and is paid by the manufacturer
uniform delivered pricing
a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of the location
freight absorption pricing
a pricing tactic in which the seller absorbs the total cost of transportation
trade discounts
discounts off list price of products to members of the channel of distribution who perform various marketing functions
cash discounts
a discount offered to a customer to entice them to pay their bill quickly
seasonal discounts
price reductions offered only during certain times of the year
dynamic pricing
a pricing strategy in which the price can easily be adjusted to meet changes in the marketplace
online auctions
e-commerce that allows shoppers to purchase products through online bidding
freemium pricing
a business strategy in which a product in its most basic version is provided free of charge but the company charges money for upgraded versions of the product with more features, greater functionality
price lining
the practice of setting a limited number of different specific prices called price points for items in a product line
prestige pricing
a pricing strategy used by luxury goods marketers in which they keep the price artificially high to maintain a favorable image of the product
bait and switch
an illegal marketing practice in which an advertised price special is used as bait to get customers into the store with the intention of switching them to a higher priced item
price fixing
the collaboration of two or more firms in setting prices usually to keep prices high
Which of the following refers to a deceptive pricing tactic in which an advertised price special is used as bait to get customers into the store with the intention of selling them a​ higher-priced item?
bait and switch
​_____ means selling two or more goods or services as a single package for one pricelong dash—a price that is often less than the total price of the items if bought individually.
price bundling
Which of the following refers to the assignment of​ value, or the amount the consumer must exchange to receive the offering or​ product?
price
Which of the following refers to the percentage of a​ market, defined in terms of either sales units or​ revenue, accounted for by a specific​ firm, product​ lines, or​ brands?
market share
In which step of the price planning process does a firm analyze the​ economy, competition, government​ regulations, consumer​ trends, and the internal​ environment?
step 4
Which of the following refers to the most popular and fastest growing digital​ currency?
bitcoin
​_____ pricing means that the firm charges a​ high, premium price for its new product with the intention of reducing it in the future in response to market pressures.
skimming
Which of the following refers to demand in which changes in price have large effects on the amount​ demanded?
elastic demand
Which of the following refers to the costs of production that do not change with the number of units​ produced?
fixed cost
Which of the following pricing strategies would be used if a firm bases the selling price on an estimate of volume or quantity that it can sell in different markets at different​ prices?
demand based pricing
Which of the following pricing strategies is usually the rule in an oligopolistic industry that a few firms​ dominate, which might be in the best interest of all players because it minimizes price​ competition?
price leadership
Which of the following refers to a pricing strategy in which the price can easily be adjusted to meet changes in the​ marketplace?
dynamic pricing
Assume that for a given​ product, the total fixed costs are​ $100,000 and the contribution per unit to fixed costs is​ $50. What is the​ break-even point expressed in the number of​ units?
2000
Which of the following refers to the costs of production that fluctuate depending on the number of units​ produced?
variable cost
Marketers often apply their understanding of the psychological aspects of pricing in a practice they call​ ________, whereby items in a product line sell at different​ prices, or price points.
price lining
A Rolex​ watch, a Louis Vuitton​ handbag, and a Rolls Royce automobile are all examples of​ _____ products.
prestige
Which of the following pricing tactics is used when price reductions are offered only during a certain time of the​ year?
seasonal discounts
Which of the following pricing strategies is heavily used by hospitality companies like​ airlines, hotels, and cruise lines because these businesses charge different prices to different customers in order to manage capacity while they maximize​ revenues?
yield management pricing
If you see a loaf of bread that is priced at​ $14.99, your past experience tells you that that price is substantially higher than a normal loaf of bread would be. If you feel that a loaf of bread should be less than​ $2.00, then this is your​ _____ price.
internal reference
Which of the following refers to an online strategy in which the price can easily be adjusted to meet changes in the​ marketplace?
internet price discrimination
Which of the following refers to an amount added to the cost of a product to create the price at which a channel member will sell the​ product?
markup
Which of the following is a business strategy in which a product in its most basic version is provided free of charge but the company charges money for upgraded versions of the product with more​ features, greater​ functionality, or greater​ capacity?
freemium pricing
​eBay, eCrater,​ Bonanzle, eBid, and CQou all utilize which of the following models to allow shoppers to bid on everything from bobbleheads to​ health-and-fitness equipment to a Sammy Sosa​ home-run ball?
online auctions
Which of the following occurs when two or more companies conspire to keep prices at a certain​ level?
price fixing
When retailers advertise products at very low prices or even below cost in the hopes that customers will purchase other items at regular​ prices, they are engaging in​ _____.
loss leader pricing