Marketing Ch. 14 – Grewal | Levy 5е

Target return pricing (p.442)
pricing strategies designed to produce specific return on their investment, usually expressed as percentage sales.
Profit oriented company (p. 442)
Focused on a target profit pricing maximizing profits or target return pricing. Institute a companywide policy that all products must provide for at least 18% profits margin to reach a particular profit goal for the firm
Sales oriented company (p.442)
Company believe that increasing sales will help the firm more than will increasing profits.
Set prices low to generate new sales and take sales away from competitors, even if profits suffer.
Competitor oriented company (p.442)
Company objective based on the premise that the firm hold measure itself primary against its competitors.
To discourage more competitors from entering the market, set prices very low
Customer oriented company (p. 442)
Company objective based on the premise that the firm hold measure itself primary according to whether it meets its customers needs.
Target a market segment of consumers who highly values a particular product benefit and set prices relatively high (referred to premium pricing)
Break-even analysis (p.452)
Technique used to examine the relationship among cost, price, revenue, and profits over different levels of production and sales to determine break even point.
Break-even point (p. 452)
The point at which the number of units sold generates just enough revenue to equal the total costs, at this point, profits are zero. It requires knowledge of fixed cost, total cost and total revenue curves. when those curves intersect, that is the break-even point.
Competitive parity (p. 443)
A firm strategy of setting prices that are similar to those major competitors.
Competitor orientation (p. 443)
A company objective based on the premise that the firm should measure itself primary against its competitors.
Complimentary product (p. 450)
Products whose demand curves are positively related, such the they rise or fail together, a percentage increases in demand for one results in a percent increase in demand for the other.
Contribution per unit (p. 453)
Equals the price less the variable cost per unit, variable used to determine the break even point in units.
Cross price elasticity (p. 450)
The percentage changes in demand for product A that occurs in response to a percentage change in price of product B. (see complementary products)
Demand curve (p.444)
Shows how many units of products or service consumer will demand during a specific period at different prices.
Dynamic pricing (p.449)
Refers to the process of charging different prices for goods or services based on the type of customer, time of the day, week, or season, and level of demand.
Elastic (p.448)
Refers to a market for a product or service that is price sensitive; relatively small changes in price will generate fairly large changes in quantity demand.
Fixed cost (p. 452)
The cost that remain essentially at the same level, regardless of any changes in the volume of production.
Gray market (p. 457)
Employs irregular but necessary illegal methods, generally. it legally circumvents authored channels of distribution to sell goods at prices lower than those intended by the manufacture.
Income effect (p.449)
Refers to the change in the quantity of product demanded by consumer, due to a change in their income.
Inelastic (p.448)
Market for a product or service that is price insensitive, relatively small changes in price will not generate large changes in the quantity demand.
Maximizing profits (p.455)
A profit strategy that relies primary on economic theory. Mathematical model that captures all factors required to explain and predict sales and profits.
Monopoly (p.455)
One firm provides the product or service in particular industry.
Monopolistic competition (456)
Occurs when there are many firms that sell closely related but not homogenous products, these products may be viewed as substitutes, but not perfect substitutes.
Oligopolistic competition (p. 456)
Occurs when only few firms dominate the market
Predatory pricing (p. 456)
A firms’ practice of setting a very low price for one or more of its products with the intent to drive its competition out of business, illegal under both Sherman Antitrust Act and Federal Trade Commission Act.
Premium pricing (p.443)
Competitor based pricing method by which the firm deliberately prices a product above the prices set for competitive products.
Firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best of for whom price does not matter
Prestige products or services ( p.446)
Those that consumer purchase for status rather than functionality.
Price (p.440)
overall sacrifice a consumer is willing to make to acquire a specific product or service
Price Elasticity on demand (p. 448)
Measures how changes in price affect the quantity of the product demanded, specifically the ration of the percentage change in quantity demanded to the percentage change in price.
Price war (p.456)
Occurs when two or more firms compete primary by lowering their prices.
Profit orientation (p.442)
A company objective that can be implemented specifically by focusing on target profit pricing, maximizing profits, or target return pricing.
Pure competition (p.456)
Occurs when different companies sell commodity products that consumers perceive as substitutable, price usually is set according to the laws of supply and demand.
Sales orientation (p.442)
Firm uses sales orientation to set price believe that increasing sales will help firm more than will increasing profits.
Status quo pricing (p. 443)
A competitor oriented strategy in which a firm change prices only to meet those competitions.
Substitute products (p. 450)
Products for which changes in demand are negatively related; a percentage increase in the quantity demanded for Product A results in percentage decrees in quantity demand on Product B.
Substitute effects (p.450)
Consumer ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand.
Target profit pricing (p.442)
Firm implements profit pricing when they have a particular profit goal as their overriding concern.
Target return pricing (p. 442)
Pricing strategy implemented by firms less concerned with absolute level of profits and more interested in rate at which their profits are generated relative to their investment; designed to produce a specific return on investment, usually expressed as percentage in sales.
Total Cost (p. 452)
The sum of variable and fixed cost.
Variable cost (p. 451)
Costs primary labor and materials, that vary with production volume.
Relation between price and quantity sold (p. 457)
When prices go up, quantity sold goes down, however with prestige products or services – demand increases the price.