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Definition
| It is very difficult for Managers to determine the price to set. Computer technology allows retailers to set price elasticity |
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Definition
| A consumer is willing and able to pay more for a product. But they do not have to because they pay market price. (the area above P1 on the curve) |
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| Firms who want to acquire consumer surplus use this approach. (catalogs) They send certain pricing to a particular zip code. (Peapod) |
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| Perfect Price Discrimination |
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Definition
| Each customer is sold the product at a different price |
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| Third Degree Price Discrimination |
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Definition
| When there are groups of customers with similar price elasticities of demand and each group pays a different price for the identical product. Airlines |
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Term
| Second Degree Price Discrimination |
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Definition
| When the firm can not identify the value each customer is wiling to pay. But the firm is able to group multiple units of the good and to charge different prices for the different groups. Quantity Discounts. Walmart |
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Term
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| Second Degree Price Discrimination- pay a lower price for higher quantity of the same good. Conversely a higher price for a smaller quantity of the same good. |
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| Quality Perceptions ( Product Line Extension) |
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Definition
| Allows the company to charge more because a certain segment of the market wants to "buy the best" Self Selection |
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Definition
| Charging a higher price when demand is high. (electricity) |
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| Cost-Plus Pricing ( Full cost Pricing) (Markup Pricing) |
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Definition
| P=(average cost)(1 + Markup) Firms estimate per unit cost then adds a Markup cost that can not be attributed to any other cost. Must use MC not AC for it to be effective |
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Definition
| THe AZT high cost and the Videx low cost for AIDS. High reference price fora consumer. Giving more for less. |
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| Is the practice of using the right most digits on the price in amounts. eg $2.98 or $399.99 |
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| Combination - Close substitutes are put together. Like leasing a car and getting a car loan. Auto Manufacturers. Also |
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Definition
| Comcast and the triple play. Maximizing it profit by linking them together. Travel Business with Air, Hotel and Car. |
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Definition
| This is when one product? brand is hurt by another product from the same company. GAP and OLD Navy - GAP going down OLD NAVY on the rise not increasing the market share for the Owner. Complements Increase the revenue for the one product. |
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Term
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Definition
| Introductory phase - not sustainable |
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Term
| Three Degrees of Process Price Discrimination |
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Definition
1st Catalog
2nd Quantity
3rd Demographic |
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Term
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Definition
High Market Power
Monopolistic
Mostly illegal |
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Term
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Definition
| Milk is and example- attracts people to a location |
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Term
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Definition
Illegal but very hard to prove
-selling under cost
-Intent to Harm competitor
-Raise the price after competitor is out of market. |
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Term
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Definition
When one firm has an Oligopoly- they set the price.
US Steel at one time
Tysons Chicken |
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