Marketing Ch.14 Flashcards Preview

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Flashcards in Marketing Ch.14 Deck (46):

Skimming Prices

etting the highest initial price that customers really wanting the product are willing to pay. As the demand for the customers who really want decrease, firm decreases the price to satisfy other customers


When does Skimming work

-Enough customers are willing to buy immediately
-The high initial price will not attract competitors
- Lowering price only has a minor effect on increasing the sales volume and reducing the unit cost
-Customers interpret the high price as high quality


Penetration Pricing

setting low initial price to appeal immediately to mass market.


When is penetration pricing efficient

- Many segments of the market are price sensitive
-Low initial price discourage competitors
- Unit production and marketing costs fall dramatically as production volumes increase


Prestige Pricing

setting a high price so that quality or status conscious consumers will be attracted to the product and buy it.


Price Lining

firms that offer a line of product may price them at a number of different specific pricing points


Odd-Even Pricing

involves setting prices a few dollars or cents under an even number.


Target Pricing-

manufacturer deliberately adjusting the consumption and features of a product to achieve the target price


Bundle Pricing

the marketing of two or more products in a single package price


Yield Management Pricing

the changing of different prices to maximize revenue for a set amount of capacity at any given time


Standard Markup Pricing

adding a fixed percentage to the cost of all items in a specific product class. Used when they have a lot of products.


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.


Cost-plus percentage of cost pricing

fixed percentage is added to total unit cost . Used for one of a kind items


Cost- plus fixed fee pricing

supplier is reimbursed for all costs but also gets a fixed fee for profit independent of cost.


Experience Curve Pricing

based on the learning effect- holds that unit cost of many products and services declines by 10-30 percent each time a firm's experience at producing and selling them doubles.


Target Profit Pricing

set an annual target of a specific dollar volume of profit


Target Return-on- Sales Pricing

set typical prices that will give them a profit that is a specified percentage


Target Return-on-Investment Pricing

method of setting prices to achieve an annual return on investment percentage


Customary Pricing

or products where tradition/standardized channel of distribution/ competitive factors dictate the price.


Above-,At-,or Below-Market Pricing

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors’ price or market price


Loss-Leader Pricing

not to increase sales but to attract customers in hopes they will buy other products as well


One-Price Policy

aka fixed pricing- setting one price for all buyers of a product or service


Flexible Price Policy

aka dynamic pricing- involves setting different prices for products/services depending on individual buyers and purchase situations.


Product Line Pricing

the setting of prices for all items in a product line. Manager seeks to cover the total cost and produce a profit for the complete line, not necessarily each item


Customer Effects

Markets weigh factors heavily that satisfy the perceptions or expectations of ultimate consumers.


Quantity Discounts

§ Reductions in unit costs for a larger order


Noncumulative quantity discounts

based on the size of an individual purchase order


Cumulative quantity discounts

- apply to the accumulation of purchase of a product over a given time period


Trade Discounts

to reward wholesalers/retailers for marketing functions they will perform in future


Cash discounts

to encourage retailers to pay bills quickly.



reductions from list or quoted prices to buyers for preforming some activity.


Trade in Allowances

price reduction given when a used product is part of payment


Promotional Allowances

money off for undertaking certain advertising or selling activities to promote e a product


Everyday low Pricing

practice of replacing promotional allowances with lower manufacturers list prices.


Geographical Adjustments

Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect the cost of transportation of the products from seller to buyer


FOB Origin Pricing-

involves the sellers naming the location of this loading as the sellers factory or warehouse. Buyer becomes responsible for transportation, trans cost and handling of product at point of loading.


Uniform Delivered pricing-

the price the seller includes all transportation costs. Seller selects mod of trans, pays fees and is responsible for all damage that occurs.


Single zone pricing

all buyers pay same delivered price for the products regardless of distance from the seller.


Multiple zone pricing

divides its selling territory into zones. The delivered price to all buyers within a zone is the same but differs between


Freight allowed pricing

price is quoted by the seller, buyer is allowed to deduct freight expenses from the list price of all the goods so the seller agrees to pay the transportation costs.


Basing-point pricing

involves selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer.


Price Fixing

illegeal under sherman act. The conspiracy among firms to set prices for a product .


Price Discrimination

illegal in most cases- practice of charging diff prices to different buyers for goods of like grade and quality.


When is price discrimination legal

-when change due to differences in cost of manufacture/sale/ or deliver resulting from differing methods or quantities.
-When price differences result from changing market conditions
-when price differences are quoted to selected buyers in good faith to meet competitors


Deceptive Pricing

price deals that mislead customers. Outlawed.


Predatory Pricing

practice of charging a very low price for a product with the intent of driving competitors out of business . illegal