BUS 346 Ch. 14

Gray market

a situation in which goods end up being sold at prices lower than those intended by the manufacturer. This can hurt the manufacturer's image by communicating poor quality

Bill desperately needed tires for his car, and he found an ad with an incredibly low price. When he got there, he found out that those had supposedly been sold out, and he was pressured into buying tires that were more expensive than he wanted. Bill found out later that Marcelo had the same experience at the store a few weeks earlier. It's quite possible that both Bill and Marcelo had become the victim of a deceptive pricing tactic known as

bait and switch

The income effect

demand tends to shift from lower-priced to higher-priced products as consumers' income increases, and vice versa

Bait-and-switch tactics

lure customers in with promises of low prices—often for products that are not even available in the store

monopolistic competition

many firms providing differentiated products

A demand curve shows the relationship between _______ in a period of time

price and demand

Barry customizes Harley-Davidson motorcycles. No two cycles are alike. He notices that very few customers even ask the price of his motorcycles before they decide to purchase them. Demand for his motorcycles is probably

price inelastic (demand wouldn't change with price)

At the break-even point,

profits are zero

Marketers spend millions of dollars annually trying to create or reinforce brand loyalty. Brand loyalty changes the demand curve for the firm's products by

reducing the price elasticity of demand

Break even point

revenue equals total costs

Sales orientation pricing strategy

sacrificing profits in the short term for more customers and profits in the long term

Health clubs often use a low, introductory offer price to get people to join their club. These low prices represent a _______ pricing strategy.

sales orientation

Unlike product, promotion, or place, price is the only part of the marketing mix

that generates revenue

Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how _______ impacts demand for products.

the income effect

Gray markets can be a challenge to marketers because

they may tarnish the manufacturer's image