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Marketing 2101 > Chapter 10 > Flashcards

Chapter 10 Flashcards

1
Q

market share

A

The percentage of a market (defined in terms of either sales units or revenue) accounted for by a specific firm, product lines, or brands.

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2
Q

prestige products

A

Products that have a high price and that appeal to status-conscious consumers.

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3
Q

price elasticity of demand

A

The percentage change in unit sales that results from a percentage change in price. (eg if price falls 10% and we sell 5% more units)

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4
Q

elastic demand

A

When changes in price have large effects on the amount demanded.

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5
Q

inelastic demand

A

When changes in price have little or no effect on the amount demanded.

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6
Q

variable costs

A

The costs of production (raw and processed materials, parts, and labor) that are tied to and vary, depending on the number of units produced.

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7
Q

fixed costs

A

Costs of production that do not change no matter the number of units produced.

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8
Q

total costs

A

The total of the fixed costs and the variable costs for a set number of units produced.

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9
Q

markup

A

An amount added to the cost of a product to create the price at which a retailer will sell the product. (eg jeans cost $20 for Kohl’s to buy, and they sell them for $40. The $20 difference is the markup.)

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10
Q

gross margin

A

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 profit.

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11
Q

list price or manufacturer’s suggested retail price (MSRP)

A

The price that the manufacturer says the consumer should pay

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12
Q

cost-plus pricing

A

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.

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13
Q

keystoning

A

retail pricing strategy in which the retailer doubles the cost of the item (100 percent markup) to determine the price.

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14
Q

demand-based pricing

A

A price-setting method based on estimates of demand at different prices.

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15
Q

target costing

A

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

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16
Q

yield management pricing

A

A practice of charging different prices to different customers to manage capacity while maximizing revenues.

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17
Q

price leadership

A

A pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or similar prices.

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18
Q

value pricing

A

A pricing strategy in which a firm sets prices that provide ultimate value to customers.

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19
Q

high/low pricing

A

A retail pricing strategy in which the retailer prices merchandise at list price but runs frequent, often weekly, promotions that heavily discount some products.

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20
Q

skimming price

A

A very high, premium price that a firm charges for its new, highly desirable product.

21
Q

penetration pricing

A

A pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it.

22
Q

price segmentation

A

the practice of charging different prices to different market segments for the same product.

23
Q

peak load pricing

A

A pricing plan that sets prices higher during periods with higher demand.

24
Q

Surge pricing

A

A pricing plan that raises prices of a product as demand goes up and lowers it as demand slides.

25
Q

bottom of the pyramid pricing

A

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.

26
Q

two-part pricing

A

Pricing that requires two separate types of payments to purchase the product.

27
Q

payment pricing

A

A pricing tactic that breaks up the total price into smaller amounts payable over time. (eg an iPhone)

28
Q

decoy pricing

A

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.

29
Q

price bundling

A

Selling two or more goods or services as a single package for one price.

30
Q

captive pricing

A

A pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item.

31
Q

F.O.B. origin pricing

A

A pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer.

32
Q

F.O.B. delivered pricing

A

A pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer.

33
Q

uniform delivered pricing

A

A pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location.

34
Q

freight absorption pricing

A

A pricing tactic in which the seller absorbs the total cost of transportation.

35
Q

trade discounts

A

Discounts off list price of products to members of the channel of distribution who perform various marketing functions.

36
Q

quantity discounts

A

A pricing tactic of charging reduced prices for purchases of larger quantities of a product.

37
Q

cash discounts

A

A discount offered to a customer to entice them to pay their bill quickly.

38
Q

seasonal discounts

A

Price reductions offered only during certain times of the year.

39
Q

dynamic pricing

A

A pricing strategy in which the price can easily be adjusted to meet changes in the marketplace.

40
Q

price lining

A

The practice of setting a limited number of different specific prices, called price points, for items in a product line.

41
Q

freemium pricing

A

A business strategy in which a product in its most basic version is provided free of charge but the company charges money (the premium) for upgraded versions of the product with more features, greater functionality, or greater capacity.

42
Q

internal reference price

A

A set price or a price range in consumers’ minds that they refer to in evaluating a product’s price.

43
Q

prestige/premium pricing

A

A pricing strategy used by luxury goods marketers in which they keep the price artificially high to maintain a favorable image of the product.

44
Q

bait-and-switch

A

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.

45
Q

loss-leader pricing

A

The pricing policy of setting prices very low or even below cost to attract customers into a store.

46
Q

unfair sales activities

A

State laws that prohibit suppliers from selling products below cost to protect small businesses from larger competitors.

47
Q

price fixing

A

The collaboration of two or more firms in setting prices, usually to keep prices high.

48
Q

predatory pricing

A

An illegal pricing strategy in which a company sets a very low price for the purpose of driving competitors out of business.

Marketing 2101 (5 decks)

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