Chp 9 Flashcards
(33 cards)
What is price?
The amount of money charged for a product or a service. More broadly, price is the sum of all the values that customers give up to gain the benefits of having or using a product or service.
What is the price floor?
No profits below a specific price.
What factors influence price?
Competition and other external factors, competitors’ strategies and other prices, marketing strategy, objectives, and mix, nature of market and demand.
What is the price ceiling?
No demand above this price.
What is customer value-based pricing?
Setting price based on buyers’ perceptions rather than on the seller’s cost.
What is value-based pricing?
The company first assesses customer needs and value perceptions. It then sets its target price based on customer perceptions of value.
What is cost-based pricing?
The company designs what it considers to be a good product, adds up the costs of making the product, and sets a price that covers costs plus a target profit.
What is competition-based pricing?
Setting prices based on competitors’ strategies, costs, prices, and market offerings.
What are fixed costs?
Costs that do not vary with production or sales level (AKA overhead).
What is pure competition?
The market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities.
What is monopolistic competition?
The market consists of many buyers and sellers trading over a range of prices rather than a single market price.
What is oligopolistic competition?
The market consists of only a few large sellers.
What is pure monopoly?
The market is dominated by one seller.
What does the demand curve show?
The number of units the market will buy in a given time period at different prices that might be charged.
What is market-skimming pricing?
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price.
What is market-penetration pricing?
Setting a low price for a new product in order to attract a large number of buyers and a large market share.
What is product line pricing?
Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices.
What is optional-product pricing?
The pricing of optional or accessory products along with a main product line.
What is captive-product pricing?
Setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.
What is by-product pricing?
Setting a price for by-products to help offset the costs of disposing of them and help make the main product’s price more competitive.
What is product bundle pricing?
Combining several products and offering the bundle at a reduced price.
What is discount pricing?
A straight reduction in price on purchases during a stated period of time or of longer quantities.
What is allowances pricing?
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way.
What is segmented pricing?
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
