| Question |
Answer |
| Skimming Pricing |
is used when introducing a new or innovative product, and involves setting the highest initial price that customers really desiring the product are willing to pay |
| Penetration Pricing |
involves setting a low initial price on a new product to appeal immediately to the mass market |
| Prestige Pricing |
involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it. |
| Price lining |
involves setting the price of a line of products 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 |
consists of (1) estimating the price that ultimate consumers would be willing to pay for a product, (2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers, and then (3) deliberately adjusting |
| Bundle pricing |
involves the marketing of two or more products in a single package price. |
| Yield management pricing |
involves the charging of different prices to maximize revenue for a set amount of capacity at any given time. |
| Standard markup pricing |
involves adding a fixed percentage to the cost of all items in a specific product class. |
| Cost-plus pricing |
involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price. |
| Experience curve pricing |
is a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm’s experience at producing and selling them doubles, resulting in possible rapid price r |
| Target profit pricing |
involves setting an annual target of a specific dollar volume of profit. |
| Target return-on-sales pricing |
involves setting a price to achieve a profit that is a specified percentage of the sales volume. |
| Target return-on-investment pricing |
involves setting a price to achieve an annual target return-on-investment (ROI). |
| Customary pricing |
involves pricing setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors. |
| Above-, at, or below-market pricing |
involves setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark. |
| Loss-leader pricing |
involves deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well. |
| One-Price Policy |
involves setting one price for all buyers of a product or service. Also called fixed pricing. |
| flexible price policy |
involves setting different prices for products and services depending on individual buyers and purchase situations. Also called dynamic pricing. |
| Product line pricing |
involves the setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item. |
| price war |
involves successive price cutting by competitors to increase or maintain their unit sales or market share. |
| Quantity discounts |
are reductions in unit costs for a larger order. |
| FOB origin pricing |
is the “free on board” (FOB) price the seller quotes that includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur (seller’s factory or warehouse). |
| Uniform delivered pricing |
is the price that the seller quotes includes all transportation costs |
| Basing-point pricing |
involves selecting one or more geographical locations (basing point) from which the list price for products plus freight expenses are charged to the buyer. |
| Price fixing |
involves a conspiracy among firms to set prices for a product. |
| Price discrimination |
is the practice of charging different prices to different buyers for goods of like grade and quality |
| Predatory pricing |
is the practice of charging a very low price for a product with the intent of driving competitors out of business |
Buen Viaje lv.2 ch 8
