Term
| what are the 6 price adjustment strategies? |
|
Definition
discount and allowance pricing
segmented or discriminatory pricing
psychologiclal pricing
promotional pricing
geographical pricing
international pricing |
|
|
Term
| most companies adjust their basic price to do what? |
|
Definition
| reward customers for certain responses such as early payment of bills, volume purchases, and off season buying |
|
|
Term
|
Definition
| price reduction to buyers who pay their bills promptly |
|
|
Term
|
Definition
| price reduction to buyers who buy large volumes |
|
|
Term
| what is a non cumulative quantity discount? |
|
Definition
single purchase
(buy three, get one free) |
|
|
Term
| what is a cumulative quantity discount? |
|
Definition
discount given over a number of purchases over time
customer is given free haircut after 10th haircut |
|
|
Term
|
Definition
also a trade discount
offered by the seller to trade channel members who perform certain functions, such as selling, storing, record keeping |
|
|
Term
|
Definition
| price reduction to buyers who buy merchandise or services out of season |
|
|
Term
| what are trade-in allowances |
|
Definition
| price reductions given for turning in an old item when buying a new one |
|
|
Term
| what are promotional allowances |
|
Definition
| payments or price reductions to reward dealers for participating in advertising and sales support programs |
|
|
Term
| what happens in segmented pricing |
|
Definition
| the company sells a product/service at two or more prices, even though the difference in prices is not based on differences in cost |
|
|
Term
| what happens in customer segment pricing? |
|
Definition
| different customers pay different prices for the same product or service |
|
|
Term
| what happens in product form pricing? |
|
Definition
| different versions of the product are priced differently, buy not according to differences in their costs |
|
|
Term
| what happens under location pricing? |
|
Definition
| a company charges different prices for different locations, even though the cost of offering each location is the same |
|
|
Term
| what happens under time pricing? |
|
Definition
| a firm varies its prices by season, the month, the day, even the hour |
|
|
Term
| for segmented pricing to be an effective strategy: |
|
Definition
1. the market must be segmentable
2. the segments must show different degrees of demand
3. the costs of segmenting and watching the market canot exceed the extra revenue obtained from the price difference; and
4. the segmented pricing must also be legal |
|
|
Term
| what is psychological pricing? |
|
Definition
| consumers use price to judge quality |
|
|
Term
| what is a reference price? |
|
Definition
| a price that buyers carry in their minds and refer to when looking at a given product |
|
|
Term
| how can reference prices be formed? |
|
Definition
| noting current prices, remembering past prices, or assessing the buying situation |
|
|
Term
| for most purchases, what don't consumers have? |
|
Definition
| all the skill or information they need to figure out whether they are paying a good price |
|
|
Term
| how do reference prices benefit businesses? |
|
Definition
department stores often markup prices and then offer discounted sale prices
this practice of using a high reference price takes advantages of the anchor-and-adjustment bias to make it seem like there is an especially attractive value |
|
|
Term
|
Definition
| the practice of choosing such prices as 19.95, .99, etc |
|
|
Term
| what is odd pricing used for? what is its implication? |
|
Definition
| emphasize low prices by putting an emphasis on the first digit, implication is that the retailer is trying to save the consumer money |
|
|
Term
| why do nordstrom and other high end retailers price in even numbers? |
|
Definition
| lends an aura of quality to the product |
|
|
Term
| what happens with promotional pricing? |
|
Definition
| companies will temporarily price their products below list price and sometimes even below cost to create buying excitement and urgency |
|
|
Term
| why will supermarkets and department stores price a few products as loss leaders? |
|
Definition
| to attract customers to the store in the hope that they will buy other items at normal markups |
|
|
Term
| what are the adverse effects of promotional pricing? |
|
Definition
can create "deal prone" customers who wait until brands go on sale before buying them
can erode a brand's value
can be used as a quick fix in lieu of developing effective long term strategies
can lead to industry price wars |
|
|
Term
| what is FOB origin pricing? |
|
Definition
a practice that means the goods are placed free on board a carrier
at that point, the title and responsibility pass to the customer, who pays the freight from the factory to the destination |
|
|
Term
|
Definition
| sets up two or more zones and all customers within a given zone pay a single total price; the more distance the zone, the higher the prices |
|
|
Term
| what is freight absorption pricing? |
|
Definition
| seller absorbs all or part of the actual freight charges in order to get the desired business |
|
|
Term
| what should international prices depend on? |
|
Definition
| economic conditions, competitive situations, laws and regulations, and development of the wholesaling and retailing system |
|
|
