Marketing: The Core (Chapter 11)

price
The money or other considerations (including other products and services) exchanged for the ownership
or use of a product or service.
barter
Exchange (goods or services) for other goods or services without using money.
value
The ratio of perceived benefits to price.
profit equation
Profit equals total revenue minus total cost.
four common approaches used to find the approximate price level:
(1) demand-oriented
(2) cost-oriented
(3) profit oriented
(4) competition-oriented
skimming pricing
Setting the highest price initial price that customers really desiring the product are willing to pay.
prestige pricing
Setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it.
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.
standard markup pricing
Entails adding a fixed percentage to the cost of all items in a specific product class.
cost-plus pricing
Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.
target profit pricing
When a firm sets an annual target of a specific dollar volume of profit.
target return-on-sales pricing
What supermarkets use to set prices that will give them a profit that is a specified percentage.
target return-on-investment pricing
To set prices to achieve a return-on-investment (ROI) target.
demand curve
A graph relating the quantity sold and the price, which shows how many units will be sold at a given price.
price elasticity of demand
The percentage change in the quantity demanded relative to a percentage change in price.
total revenue
The total money received from the sale of a product; the unit price of a product multiplied by the quantity sold.
total cost
The total expenses incurred by a firm in producing and a marketing product; total cost is the sum of fixed costs and variable costs.
break-even analysis
A technique that examines the relationship between total revenue and total cost to determine profitably at different levels of output.
pricing objective
Expectations that specify the role of price in an organization’s marketing strategic plans.
pricing constraints
Factors that limit the range of prices a firm may set.
horizontal price fixing
When two or more competitors collude to explicitly or implicitly set prices.
vertical price fixing
Involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.
fixed pricing
Setting one price for all buyers of a product or service.
flexible-price policy
Involves getting different prices for products and services depending on individual buyers and purchase situations in light of demand, cost, and competitive factors.
four kinds of discounts:
(1) quantity
(2) seasonal
(3) trade (functional)
(4) cash
allowances
Reductions from list or quoted prices to buyers for performing some activity