marketing ch/13

Prestige Prodcuts

Consumers purchase for their status rather than their functionality

Variable Products

Costs primarily labor and materials that vary with production volume

Substitute Products

Demands are Negatively Related

Pure competition

Different companies that consumers perceive as substitutable sell commodity products

Target Return Pricing

Pricing strategies designed to produce a specific return on their investment

complementary products

Products whose demands are positively related

Income Effect

Refers to the change in quantity of a prouct demanded by consumers due to a change in their income.

Maximizing Profits

Relies on Economic theory

Fixed Costs

Remain essentially the same level regardless of any changes in the volume of production

Gray Market

Employs irregular but not necessarily illegal methods, to sell goods at prices lower than those intended by the manufacturer

Customer Orientation

Explicitly invokes the concept of customer value

Cross Price Elasticity

% change in the quantity of product a demand compared with the % change in price in product b

Status Quo Pricing

Changes price only to meet those of the competition

Premium Pricing

Firms deliberately prices a product above the prices st for competing products to caputre those customers who always shop for hte best or for who price does not matter.

Elastic

Generally the product is this less than -1. Meaning a one percent decrease in a price produces more than a 1 percent increase in the quantity sold

Inelastic

Greater than -1 1 percent decrease results in less than a 1 percent increase in quantity sold

Substitution Effect

Greater the availability of substitute products, the higher the price elasticity of demand for any given product will be

Target Profit Pricing

Have a particular profit goal as their overriding concern.. Price is used to stimulate a certain level of sales at a certain profit per unit

Competitive Parity

Means they set prices that are similar to those of their major competitors

Price Elasticity of Demand

Measures how changes in a price affect the quantity of the product demanded

Monopolistic Competition

Occurs when there are many firms competing for customers in a given market but their products are differentiated

Oligopolistic Competition

Only a few firms domiane

Price

Overall sacrifice a consumer is willing to make to acquire a specific product or service.

Break Even Point

Point at which the number of units sold generates just enough revenue to equal the total costs

Contribution per unit

Price less the variable cost per unit

Demand Curve

Shows how many units of a product or service consumers will demand during a specific period of time at different prices

Total Cost

Simply the sum of the variable and fixed costs

Fair Trade

Socially responsible movement that ensures that producers receive fair prices for their products

Competitor Orientation

Strategize according to the premise that they should measure themselves primarily against the competition

Break Even Analysis

Useful technique that enables managers to examine relationship among cost, price, revenue, and profit over different levels of production and sales

Price Wars

Usually occur in oligopolistic markets, two (or more) firms lowering prices one after the other

Sales Orientation

believe increasing sales will help the firm more than will increasing profits.

Cross Shopping

pattern of buying both premium and low priced brands