marketing chapter 20&21

that which is given up in an exchange to acquire a good or service
price
the price charged to customers multiplied the number of units sold
revenue
revenue minus expenses
profit
net profit after taxes divided by total assets
revenue on investment
a company’s product sales as a percentage of total sales for that industry
market share
a pricing objective that maintains existing prices or meets the competition’s prices
status quo pricing
the quantity of a product that will be sold in the market at various prices for a specified period
demand
the quantity of a product that will be offered to the market by a supplier at various prices for a specified period
supply
price at which demand and supply are equal
price equilibrium
consumer’s responsiveness or sensitivity to changes in price
elasticity of demand
situation in which consumer demand is sensitive to changes in price
elastic demand
situation in which an increase or a decrease in price will not significantly affect demand for the product
inelastic demand
a situation in which total revenue remains the same when prices change
unitary elasticity
a strategy whereby prices are adjusted over time to maximize a company’s revenues
dynamic pricing
technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity by discounting early purchases, limiting early sales at these discounted prices, and overbooking capacity
yield management system
a cost that varies with changes in level of output
variable cost
cost that does not change as output is increased or decreased
fixed cost
total variable costs divided by quantity of output
average variable cost
total costs divided by quantity of output
average total cost
total fixed costs divided by quantity of output
average fixed cost
the change in total costs associated with a one unit change in output
marginal cost
cost of buying the product from the producer, plus amounts rom profit and for expenses not otherwise accounted for
markup pricing
practice of marketing up prices by 100 percent, or doubling the cost
keystoning
a method of setting prices that occurs when marginal revenue equals marginal cost
profit maximization
the extra revenue associated with selling an extra unit of output or the change in total revenue with a one-unit change in output
marginal revenue
a method of determining what sales volume must be reached before total revenue equals total cost
break even analysis
stocking well known branded items at high prices to sell more brands at discounted prices
selling against the brand
private electronic network that links a company with its suppliers and customers
extranet
charging a high price to help promote a high quality image
prestige pricing
long term pricing framework that establishes the initial price for a product and the intended direction for the price
price strategy
pricing policy whereby a firm charges a high introductory price
price skimming
pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out
penetration pricing
agreement between two or more firms on the price they will charge for a product
price fixing
practice of charging a very low price for a product with the intent of driving competitors out of business
predatory pricing
general price level at which the company expects to sell the good or service
base price
a price reduction offered to buyers buying in multiple units or above a specified dollar amount
quantity discount
deduction from list price that applies to the buyer’s total purchases made during a specific period
cumulative quantity discount
deduction from list price that applies to single order
noncumulative quantity discount
price reduction offered in return for prompt payment of a bill
cash discount
a discount to wholesalers and retailers for performing channel functions
functional discount
price reduction for buying merchandise out of season
seasonal discount
payment to a detailer for promoting the manufacturer’s product
promotional allowance
cash refund given for the purchase of a product during a specific period
rebate
setting the price at a level that seems to the customer to be a good price compared to the prices of other options
value based pricing
price tactic that requires buyer to absorb freight costs
FOB origin pricing
pricing tactic in which seller pays the actual freight chargers and bills every purchases a flat charge
uniform delivered pricing
modification of uniform delivered pricing that divided US into segments and charges flat fee for zones
zone pricing
price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer
freight absorption pricing
price tactic that charges freight from a given point regardless of the city from which the goods are shipped
basing point pricing
price tactic that offers all goods and services the same price
single price tactic
price tactic in which customers pay different prices for essentially the same merchandise bought in equal quantities
flexible pricing
practice of offering a product line with several items at specific price points
price lining
price tactic in which a product is sold near or below cost in hope that shoppers will buy other items once they are in the store
leader pricing
price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high pressure selling to persuade consumers to buy more expensive merchandise
bait pricing
price tactic that uses odd number prices to connate bargains and even number price to imply quality
odd even pricing
marketing two or more product in a single package for a special price
price bundling
reducing the bundle of services that comes with the basic product
unbundling
price tactic that charges two separate amounts to consume a single good or service
two part pricing
extra fee paid by consumer for violating terms of purchase agreement
consumer penalty
setting prices for an entire line of products
product line pricing
costs that are shared in the manufacturing and marketing of several products in a product line
joint costs
price tactic used for industrial installations and many accessory items in which a firm price is not set until item is finished or delivered
delayed quotation pricing
price tactic in which the final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made
escalator pricing
use of discounts by salespeople to increase demand for one or more products in a line
price shading