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MKT 3013 - Chapter 12
Pricing Concepts
36
Marketing
Undergraduate 3
10/04/2012

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Term
allowance
Definition
A concession in price to achieve a desired goal
Term
average fixed cost
Definition
The fixed cost per unit produced
Term
average total cost
Definition
The sum of the average fixed cost and the average variable cost
Term
average variable cost
Definition
The variable cost per unit produced
Term
barter
Definition
The trading of products
Term
base-point pricing
Definition
Geographic pricing that combines factory price and freight charges from the base point nearest the buyer
Term
break-even point
Definition
The point at which the costs of producing a product equal the revenue made from selling the product
Term
cash discount
Definition
A price reduction given to buyers for prompt payment or cash payment
Term
cumulative discounts
Definition
Quantity discounts aggregated over a stated time period
Term
demand curve
Definition
A graph of the quantity of products expected to be sold at various prices if other factors remain constant
Term
external reference price
Definition
A comparison price provided by others
Term
F.O.B. destination
Definition
A price indicating the producer is absorbing shipping costs
Term
F.O.B. factory
Definition
The price of merchandise at the factory before shipment
Term
fixed costs
Definition
Costs that do not vary with changes in the number of units produced or sold
Term
freight absorption pricing
Definition
Absorption of all or part of actual freight costs by the seller
Term
geographic pricing
Definition
Reductions for transportation and other costs related to the physical distance between buyer and seller
Term
internal reference price
Definition
A price developed in the buyer’s mind through experience with the product
Term
marginal cost (MC)
Definition
The extra cost incurred by producing one more unit of a product
Term
marginal revenue (MR)
Definition
The change in total revenue resulting from the sale of an additional unit of a product
Term
noncumulative discounts
Definition
One-time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased
Term
nonprice competition
Definition
Emphasizing factors other than price to distinguish a product from competing brands
Term
prestige sensitive
Definition
Drawn to products that signify prominence and status
Term
price
Definition
The value paid for a product in a marketing exchange
Term
price competition
Definition
Emphasizing price as an issue and matching or beating competitors’ prices
Term
price conscious
Definition
Striving to pay low prices
Term
price discrimination
Definition
Employing price differentials that injure competition by giving one or more buyers a competitive advantage
Term
price elasticity of demand
Definition
A measure of the sensitivity of demand to changes in price
Term
quantity discounts
Definition
Deductions from the list price for purchasing in large quantities
Term
seasonal discount
Definition
A price reduction given to buyers for purchasing goods or services out of season
Term
total cost
Definition
The sum of average fixed and average variable costs times the quantity produced
Term
trade (functional) discount
Definition
A reduction off the list price a producer gives to an intermediary for performing certain functions
Term
transfer pricing
Definition
Prices charged in sales between an organization’s units
Term
uniform geographic pricing
Definition
Charging all customers the same price, regardless of geographic location
Term
value conscious
Definition
Concerned about price and quality of a product
Term
variable costs
Definition
Costs that vary directly with changes in the number of units produced or sold
Term
zone pricing
Definition
Pricing based on transportation costs within major geographic zones
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