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Chapter 12
Pricing Concepts and Management Marketing
| Term | Definition |
|---|---|
| price competition | emphasizing price as an issue and matching or beating competitors' prices |
| nonprice competition | emphasizing factors other than price to distinguish a product from competing brands |
| pricing objectives | goals that describe what a firm wants to achieve through pricing |
| demand curve | a graph of the quantity of products a firm expects to sell at various prices if other factors remain constant |
| price elasticity of demand | a measure of the sensitivity of demand to changes in price |
| fixed costs | costs that do not vary with changes in the number of units produced or sold |
| average fixed cost | the fixed cost per unit produced |
| variable costs | costs that vary directly with changes in the number of units produced or sold |
| average variable cost | the variable cost per unit produced |
| total cost | the sum of average fixed and average variable costs, times the quantity produced |
| average total cost | the sum of the average fixed cost and the average variable cost |
| marginal cost (MC) | the extra cost incurred by producing one more unit of a product |
| marginal revenue (MR) | the change in total revenue resulting from the sale of an additional unit of a product |
| breakeven point | the point at which the costs of producing a product equal the revenue made from selling the product |
| cost-based pricing | adding a dollar amount or a percentage of the cost to the cost of the product to establish the price |
| cost-plus pricing | adding a percentage of the manufacturer's total cost to that total cost to establish the price of a custom-made product |
| markup pricing | adding to the costs of the product a predetermined percentage of that cost |
| demand-based pricing | pricing based on the level of demand for the product |
| competition-based pricing | pricing influenced primarily by competitor's prices |
| price skimming | charging the highest possible price that buyers who most desire the product will pay |
| penetration pricing | setting prices below those of competing brands to penetrate a market and gain a significant market share quickly |
| differential pricing | charging different prices to different buyers for the same quality and quantity of product |
| negotiated pricing | establishing a final price through bargaining between seller and customer |
| secondary-market pricing | setting one price for the primary target market and a different price for another market |
| periodic discounting | temporary reduction of prices on a patterned or systematic basis |
| random discounting | temporary reduction of prices on an unsystematic basis |
| psychological pricing | strategies that encourage purchases based on consumers' emotional responses, rather than on economically rational ones |
| odd-number pricing | the strategy of setting prices using odd numbers that are slightly below whole-dollar amounts |
| multiple-unit pricing | the strategy of setting a single price for two or more units |
| reference pricing | pricing a product at a moderate level and positioning it next to a more expensive model or brand |
| bundle pricing | packaging together two or more complementary products and selling them for a single price |
| everyday low prices (EDLPs) | setting a low price for products on a consistent basis |
| customary pricing | pricing on the basis of tradition |
| captive pricing | pricing the basic product in a product line low, but pricing related items at a higher level |
| premium pricing | pricing the highest-quality or most versatile products higher than other models in the product line |
| price lining | the strategy of selling goods only at certain predetermined prices that reflect definite price breaks |
| price leaders | products priced below the usual markup, near cost, or below cost |
| special event pricing | advertised sales or price cutting linked to a holiday, season, or event |
| comparison discounting | setting a price at a specific level and comparing it with a higher price |
| geographic pricing | reductions for transportation and other costs related to the physical distance between buyer and seller |
| transfer pricing | prices charged in sales between an organization's units |
| discount | a deduction from the price of an item |
Created by:
hallie999
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