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Definition
the value the customer give up or exchange to obtain a product
-the only p that represents revenue
-effects all other areas of the marketing mix |
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Definition
cash and credit-most common,
goods and services,
a favor,
anything the other party values |
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Definition
| the value of something that is given up to obtain something else |
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Term
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Definition
| Develop Pricing Objectives, Estimate Demand, Determine Costs, Evaluate the Pricing Environment,choose a pricing strategy, Develop Pricing tactics |
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Term
| Types of Pricing Objectives |
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Definition
| Sales or market share objectives, Profit objectives, Competitive effect objectives, Customer satisfaction objectives, image enhancement objectives |
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| Sales or marketing share objectives |
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Definition
| maximize sales or increase market share |
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Definition
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| Competitive effect objectives |
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Definition
| reduce the effectiveness of our competition markets |
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Definition
| building long term customer relationships |
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| Image enhancement objectives |
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Definition
| focused on promoting product quality and image |
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Definition
increase/decrease sticker price
increase/decrease quality
increase/decrease quantity
change the terms of the sale |
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Definition
| People may be willing to pay a premium because they believe it makes a statement about their own worth. |
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Term
Estimating Demand
Identify demand for an entire product category
Predicts the company market share |
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Definition
-refers to customers desire for products,
-How big is the pie,
-How much of the product do consumer want,
-How big of a slice can we get,
-How will this change as the price goes up or down |
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Term
| The Price Elasticity of Demand |
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Definition
A measure of the sensitivity of customers to changes in price
%change of quality demanded/%change of price |
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Term
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Definition
| Variable costs,Fixed costs, Average fixed costs, Total costs |
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Definition
| varies as production varies with unit produce |
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Definition
| remains constants don't change with unit produced. |
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Definition
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| Variable Costs + Fixed Costs |
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Definition
| Examines the relationship between cost and price and determines what sales volume must be reached |
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Definition
-Provides a way for marketers to look at cost and demand at the same time
-Examines the relationship of marginal cost to marginal revenue
Profit is maximized when marginal revnue =marginal costs |
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Term
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Definition
| cost associated with producing one additional unit |
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Definition
| Change in revenue from selling one additional unit |
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Term
| Evaluating the Pricing Environment |
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Definition
| The economy, the competition, Consumer trends, and international environmental influences. |
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Term
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Definition
trimming the fat-during the recession when companies lower prices
Increasing Prices- during inflation the price increase |
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Definition
| stay away from price wars |
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Definition
| demographics and cultural shifts |
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Term
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Definition
cost in adding a particular markup
-marketers figures all costs for the product and then adds desired profit per unit.
-Straight markup pricing-price is calculated by adding a predetermined % to the costs. |
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| Pricing Strategies Based on Costs:Advantages |
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Definition
-Simple to calculate
-relatively risk free |
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Term
| Pricing Strategies Based on Cost:Disadvantages |
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Definition
Fails to consider: target market, demand, competition, product life cycle, products image
Difficult to accurately estimate. |
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Term
| Steps in Costs-Plus Pricing |
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Definition
Estimate unit costs
Calculate mark-up
-markup on cost
-markup on selling price
gross margin |
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Term
| Pricing Strategies based on Demand |
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Definition
selling price is based on an estimate of volume or quantity that a firm can sell in different marketers at different prices
-Target costing
-Yield management pricing |
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Term
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Definition
| identifying the quality that our customers needs the price their willing to pay and then creating the product |
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Term
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Definition
| A company charges different prices to different customers in order to manage capacity. |
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Term
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Definition
-Value Pricing (EDLP)-offers a fair value to consumers
-Everyday lower pricing strategy- Ex. Walmart |
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Term
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Definition
| Skimming Price,Penetration Pricing,Trial Pricing, |
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Term
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Definition
when a company set a high intentional prices with plans to lower them in the future
*fewer but more profitable sales |
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Definition
Sets a low price at the beginning penetrate the market quickly and deeply, a lot of customers, large market share
*more sales but less profitable |
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Definition
| Offering a low price for a limited time period. Reduces consumer perceived risks |
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Term
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Definition
Pricing for Individual Products
Pricing for Multiple Products |
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| Pricing for individual Products |
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Definition
Two part pricing
Payment Pricing |
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Definition
| two separate payments for a product |
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Definition
| breaking price into smaller amounts |
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| Pricing for multiple Products |
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Definition
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Term
| Pricing for multiple Products |
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Definition
Price bundling
Captive Pricing |
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Term
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Definition
| two or more goods sold as a single package for one price |
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Definition
| Strategically price two products that only work when used together |
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Definition
| financing (low interest), warranties, maintenance, rebates, special events, loss leader-selling products low to bring people in |
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Term
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Definition
| distribution-based pricing, F.O.B. pricing, International distribution pricing terms of sale, basing-point pricing, uniform delivered pricing,freight absorption pricing. |
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Term
| Discounting for Channel members |
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Definition
| Trade or functional discounts, Quantity discounts, Cash discounts, Seasonal discounts. |
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Term
| Trade of functional discounts |
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Definition
| *% discount of the list price for member of the channel. |
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Term
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Definition
| Pricing tactic of charging reduced prices of purchases of larger quantities of a product |
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Definition
| encourages quick payments of bills |
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Definition
| offering certain price at varies times of the year |
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Definition
| Pricing structure built around list price |
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Definition
| the price that the manufacturer sets as appropriate price for the end consumer |
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| Pricing with electronic commerce |
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Definition
Dynamic pricing strategies
-price can be adjusted to meet changes in the marketplace.
Auctions |
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Term
| Psychological Issues in Pricing |
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Definition
Internal Reference Prices-consumers have a set price or price range in their mind
-if actual price is higher that will not purchase
-if it is to low below the internal reference price they will not purchase either.
Competition as reference Price |
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Term
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Definition
| Occurs when consumers are unable to judge the quality of a product through examination of prior exchange. |
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Term
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Definition
| The practice of setting a limited number of different specific prices called price points, for items in a product line. |
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| Psychological Pricing Strategies |
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Definition
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Term
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Definition
| marketers assume that there is a psychological response to odd prices that differs from even prices. Which why they set prices at 1.99, 23.67 and etc. |
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Term
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Definition
Occurs when two or more companies conspire to keep prices at a certain level
-Horizontal price fixing
-Vertical price fixing |
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Term
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Definition
| occurs when competitors make the same product jointly determine wheat price they each will charge. |
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Term
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Definition
| occurs when manufactures tries to force retailer to sell at a certain price (suggested retail price) |
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Term
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Definition
| A company sets a very low price for the purpose of driving competitors out of business. |
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