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Chapter 20
Marketing
Term | Definition |
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price strategy | a basic, long-term pricing framework that established the initial price for a product and the intended direction for price movements over the product life cycle |
price skimming | a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion |
penetration pricing | a pricing policy whereby a firm charges a relatively low price for a product initially as a way to reach the mass market |
status quo pricing | charging a price identical to or very close to the competition's price |
unfair trade practice acts | laws that prohibit wholesales and retailers from selling below cost |
price fixing | an agreement between two or more firms on the price they will charge for a product |
predatory pricing | the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market |
base price | the general price level at which the company expects to sell the good or service |
quantity discount | a price reduction offered to buyers buying in multiple units or above a specified dollar amount |
cumulative quantity discount | a deduction from list price that applies to the buyer's total purchases made during a specific period |
noncumulative quantity discount | a deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period |
cash discount | a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill |
functional discount (trade discount) | a discount to wholesalers and retailers for performing channel functions |
seasonal discount | a price reduction for buying merchandise out of season |
promotional allowance (trade allowance) | a payment to a dealer for promoting the manufacturer's products |
rebate | a cash refund given for the purchase of a product during a specific period |
value-based pricing | setting the price at a level that seems to the customer to be a good price compared to the prices of other options |
FOB (free-on-board) origin pricing | a price tactic that requires the buyer to absorb that freight costs from the shipping point |
uniform delivered pricing | a price tactic in which the seller pays the actual freight charges and bills every purchaser an identical, flat freight charge |
zone pricing | a modification of uniform delivered pricing that divided the U.S. (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone |
freight absorption pricing | a price tactic in which the sellers pays all or part of the actual freight charges and does not pass them on to the buyer |
basing-point pricing | a price tactic that charges freight from a given (basing) point, regardless of the city from which the goods are shipped |
single-price tactic | a price tactic that offers all goods and services at the same price (or perhaps 2 or 3 prices) |
flexible pricing (variable pricing) | a price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities |
price lining | the practice of offering a product line with several items at specific price points |
leader pricing (loss-leader pricing) | a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store |
bait pricing | a price tactic that tries to get consumers into a store through false or misleading price advertising the uses high-pressure selling to persuade consumers to buy more expensive merchandise |
odd-even pricing (psychological pricing) | a price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality |
price bundling | marketing two or more products in a single package for a special price |
unbundling | reducing the bundle of services that comes with the basic product |
two-part pricing | a price tactic that charges two separate amounts to consume a single good or service |
consumer penalty | an extra fee paid by the consumer for violating the terms of the purchase agreement |
product line pricing | setting prices for an entire line of products |
joint costs | costs that are shared in the manufacturing and marketing of several products in a product line |
delayed-quotation pricing | a price tactic used for industrial installations and many accessory items in which a firm price is not set until the item is either finished or delivered |
escalator pricing | a price tactic in which the final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made |
price shading | the use of discounts by salespeople to increase demand for one or more products in a line |