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Pricing
Term | Definition |
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price | the formal ratio that indicates the quantity of money goods or services needed to acquire a given quantity of good or services |
market share | the percentage of a market (defined in either terms of units or revenue) accounted for by a specific entry |
market position | Position refers the customer's perceptions of the place a product or brand occupies in a market segment. In some markets, a position is achieved by associating the benefits of a brand with the needs or life style of the segments. |
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 | 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 discrimination | The practice of charging different buyers different prices for the same quantity and quality of products or services. |
return of investment (ROI) | - Return on investment (ROI) is 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 value in-use pricing or value-oriented pri |
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, or to a price just under a round number |
price lining | A limited number of predetermined price points at which merchandise will be offered for sale-e.g., $7.95, $10.95, $14.95. |
promotional pricing | when prices are reduced for a short period of time during a sales promotion. |
cash discount | - 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 befairly elastic |