Chapter 19 Flashcards
That which is given up in an exchange to acquire a good or service
price
We infer _____ information from price—higher quality equals higher price
quality
Consumers are interested in obtaining a “___ ___ ___” for the
price at the time of the purchase
perceived reasonable value
The price charged to customers multiplied by the number of
units sold
revenue
Revenue minus expenses
To earn a ______, managers must choose a price that is not too high or too
low—a price that equals the perceived value to target consumers.
profit
Net profit after taxes divided by total assets
Return on investment (ROI)
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
Consumers’ responsiveness or sensitivity to changes in
price
elasticity of demand
A situation in which consumer demand is sensitive to changes
in price
elastic demand
A situation in which an increase or a decrease in price will
not significantly affect demand for the product
inelastic demand
Which of the following terms is defined as “consumers’
responsiveness or sensitivity to changes in price”?
A. Elasticity of demand
B. Supply
C. Inelastic demand
D. Demand
A. Elasticity of demand
The ability to change prices very quickly, often in real time using software programs
dynamic pricing
Occurs in a fluid market where demand changes
rapidly, often hourly. When demand increases, so do prices and vice
versa
surge pricing
______ determined strictly on the basis of costs may be too high for the
target market or too low, resulting in unnecessarily low returns
prices
A cost that varies with changes in the level of output
variable cost
A cost that does not change as output is increased or
decreased
fixed cost
The cost of buying the product from the producer, plus
amounts for profit and for expenses not otherwise accounted for
markup pricing
The practice of marking up prices by 100 percent, or
doubling the cost
keystoning
A method of determining what sales volume
must be reached before total revenue equals total costs
break-even analysis
Management often sets
prices high during the introductory stage to
recover its development costs quickly. However,
if the target market is highly price sensitive,
management often finds it better to price the
product at market level or lower
introductory stage
Prices generally begin to stabilize
for several reasons:
− Competitors have entered the market, increasing
the available supply.
− The product has begun to appeal to a broader
market.
− Economies of scale have begun to lower costs
growth stage
