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Marketing Ch_18
Pricing Concepts
| Question | Answer |
|---|---|
| Price | Exchange value of a good or service |
| Robinson-Patman act | Federal legislation prohibiting price discrimination not based on a cost differential; also prohibits selling at an unreasonably low price to eliminate competition |
| Unfair Trade Laws | State laws acquiring sellers to maintain minimum prices for comparable merchandise |
| Fair-trade laws | statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product |
| Fair Trade | some retailers are charging higher than market prices for commodities such as coffee in a campaign to provide a living wage to farmers |
| Profitability objectives | profit maximization and target return |
| Volume Objectives | Sales Maximization and market share |
| Meeting Competition objectives | value pricing |
| Prestige objectives | lifestyle, image |
| Not-for-profit objectives | profit maximization, cost recovery, market incentives, market suppression |
| Profit Maximization | point at which the additional revenue gained by increasing the price of a product equals the increase in total costs |
| Marginal Analysis | Price at the point at which further increases will cause disproportionate decreases in the number of units sold |
| target-return objectives | short-run or long-run pricing objectives of achieving a specified return on either sales or investment |
| market-share objective | the coal of controlling a specified minimum share of the market for a firm's good of service |
| Profit Impact of Market Strategies | Research that discovered a strong politic relationship between a firm's market share and product quality and its return on investment |
| Value Pricing | Pricing strategy emphasizing benefits derived from a product in comparison to the price and quality levels of competing offerings |
| Prestige Objectives | establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers |
| Cost Recovery | Attempt to recover only the actual cost of operating the unit |
| Market Incentives | lower-than=average pricing policy or offer a free service to encourage increased usage of the good or service |
| Customary prices | traditional prices that customers expect to pay for certain goods and services |
| Demand | refers to schedule of the amounts of a firm's product that consumers will purchase at different prices during a specified time period |
| Supply | refers to a schedule of the amounts of a good or services that will be offered for sale at different prices during a specified period |
| Pure Competition | market structure with so many buyers and sellers that no single participant can significantly influence price |
| Monopolistic Competition | most retailing which features large numbers of buyers and sellers. these diverse parties exchange heterogeneous, relatively well-differentiated products, giving marketers some control over price |
| Oligopoly | pricing decisions by each seller are likely to affect the market but no single seller controls it. High start up costs often form oligopoly |
| Monopoly | is a market structure in which only one seller of a product exists and for which there are no close substitutes |
| variable costs | raw materials and labor costs, change with the level of production |
| Fixed Costs | such as lease payments or insurance costs, remain stable at any production level within a certain range |
| average total costs | are calculated by dividing the sum of the fixed and variable costs by the number of units produced |
| Marginal cost | is the change in total cost that results from producing an additional unit of output |
| Elasticity | Measure of responsiveness of purchasers and suppliers to a change in price |
| Cost-plus pricing | uses a base-cost figure per unit and adds a markup to cover unassigned costs and to provide a profit |
| Full-cost pricing | uses all relevant variable costs in setting a product's price. It allocates fixed costs that cannot be directly attributed to the production of the specific priced item |
| Incremental-cost pricing | which attempts to use only costs directly attributable to a specific output in setting prices |
| Breakeven Analysis | Pricing technique used to determine the number of products that must be sold at a specified price to generate enough revenue to cover total costs |
| Modified breakeven analysis | combines the traditional breakeven analysis model with an evaluation of consumer of demand |
| Yield Management | Pricing strategy that allows marketers to vary prices based on such factors as demand, even though the cost of providing those goods or services remains the same |
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