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Pricing
Term | Definition |
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Price | The formal ratio that indicates the quantities of money goods or services needed to acquire a given quantity of goods or services |
Market Share | the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity |
Market Position | Positioning refers to the customer's perceptions of the place a product or brand occupies in a market segment |
Cost | The money expended to produce and market a product or service |
Markup | The difference between merchandise cost and the retail price |
Margin | The difference between the selling price and total unit costs for an item |
Markdown | The amount of a reduction from the selling price |
Break-Even Point | The sales volume at which total revenues are equal to total costs |
Elasticity | The degree that an economic variable changes in response to a change in another economic variable |
Price Competition | The rivalry among firms seeking to attract customers on the basis of price, rather than by the use of other marketing factors |
Non-Price Competition | The rivalry based on quality of service, distribution, and promotion that highlights the benefits and features of their products |
Price Fixing | The practice of two or more sellers agreeing on the price to charge for similar products or services |
Price Discriminant | The practice of charging different buyers different prices for the same quantity and quality of products or services |
Market Share | the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity |
Return on Investment (ROI) | one way of considering profits in relation to capital invested |
Cost-Based Pricing | A pricing method in which a fixed sum or a percentage of the total cost is added to the cost of the product to arrive at its selling price |
Demand-Based Pricing | A method of pricing in which the seller attempts to set price at the level that the intended buyers are willing to pay. It is also called valuein-use pricing or value-oriented price |
Flexible-Price Policy | A practice of selling at different prices to different customers. This practice could be suspect under the Robinson-Patman Act |
One-Price Policy | A policy that, at a given time, all customers pay the same price for any given item of merchandise |
Psychological Pricing | A method of setting prices intended to have special appeal to consumers |
Prestige Pricing | Higher than average prices to suggest status and high quality to the customer |
Odd/Even Pricing | A form of psychological pricing that suggests buyers are more sensitive to certain ending digits (Odd price refers to a price ending in an odd number/a price just under a round number. Even price refers to a price ending in a whole number or in tenths) |
Price Lining | A limited number of predetermined price points at which merchandise will be offered for sale |
Promotional Pricing | When prices are reduced for a short period of time during a sales promotion |
Cash Discounts | A premium for advance payment at a rate that is usually higher than the prevailing rate of interest. It also is a reduction in price allowed the buyer for prompt payment |
Quantity Discounts | A reduction in price for volume purchases |
Trade Discounts | The discount allowed to a class of customers (manufacturers, wholesalers, retailers) on a list price before consideration of credit terms. It applies to any allowance granted without reference to the date of payment |
Promotional Discounts | An allowance given by vendors to retailers to compensate the latter for money spent in advertising a particular item in local media, or for preferred window and interior display space used for the vendor's product |
Seasonal Discounts | A special discount to all retailers who place orders for seasonal merchandise well in advance of the normal buying period |
Skimming Pricing | A method of pricing that attempts to first reach those willing to buy at a high price before marketing to more price-sensitive customers |
Penetration Pricing | A pricing policy that sets a low initial price in an attempt to increase market share rapidly. This policy is effective if demand is perceived to be fairly elastic |