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| technique used to examine the relationships among, cost, price, revenue, and profit over different levels of production and sales to determine the break even point |
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| The point at which the number of units sold generates enough revenue to equal the total costs . At this point profits are zero |
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| A firm's strategy of setting prices that are similar to those of major competitors |
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| A company objective based on the premise that the firm should measure itself primarily against its competition |
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| Products whose demand curves are positively related , such that they rise or fall together. A percentage increase in demand for one results in a percentage increase in demand for the other. |
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| Equals the price less the variable cost per unit. Variable used to determine the break even point in units |
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| The percentage change in demand for product A that occurs in response to a percentage change in price of product B. |
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| The pattern of buying both premium and low-priced merchandise or patronizing both expensive, status-oriented retailers and price-oriented retailers |
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| A company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers needs. |
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| Shows how many units of a product or service consumers will demand during a specific period at different prices |
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| Refers to a market for a product or service that is sensitive, that is, relatively small changes in price will generate fairly large changes in the quantity demanded. |
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| Those costs that remain essentially at the same level, regardless of any changes in the volume of production |
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| Employs irregular but not necessarily illegal methods. Generally , it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer |
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| Refers to the change in quantity of a product demanded by consumers due to a change in their income |
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| Refers to a market for a product or service that is price insensitive. Relatively small changes in price will not generate large changes in quantity |
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| A profit strategy that relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all factors required to explain and predict sales and profits, It should be able to identify the price at which profits are maximized |
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| One firms provides the product or service in a particular industry |
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| Occurs when there are many firms that sell closely related but not homogeneous products. These products may be viewed as substitutes but are not perfect substitutes |
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| oligopolistic competition |
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| Occurs when only a few firms dominate a market |
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| A firms practice of setting a very low price for one or more of its products with the intent to drive its competition out of business |
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| A competitive based pricing method by which the firm deliberately prices a product above the prices set for competing products to capture those consumers who always shop for the best or for whom prices does not matter. |
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| Prestige Products or Services |
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| Those that consumers purchase for status rather than functionality |
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| The overall sacrifice a consumer is willing to make time, money or energy, to acquire a product |
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| Price elasticity of demand |
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| Measures how changes in a price affect the quantity of the product demanded. Specifically the ratio of the percentage change in quantity demanded to the percentage change in price |
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| Occurs when two or more firms compete primarily by lowering their prices |
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| A company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing |
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| Occurs when different companies sell commodity products that consumers perceive as substitutable. Price is usally set according to the laws of supply and demand |
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| The price in an auction that is the minimum amount at which a seller will sell an item |
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| A company objective based on their belief that increasing sales will help the firm more than will increasing profits |
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| A competitor-oriented strategy in which a firm changes prices only to meet those of competition |
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| Products for which changes in demand are negatively related. A percentage increase in the quantity demanded for product A results in a percentage decrease in the quantity demanded for product B. |
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| Refers to consumers ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand |
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| A pricing strategy implemented by firms when they have a particular profit goal as their overriding concern. Uses price to stimulate a certain level of sales at certain profit per unit |
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| a pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments |
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| The sum of the variable and fixed costs |
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| Those costs primarily labor and materials that vary with production volume |
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