MKT 11

-oriented approaches to pricing regard expected customer tastes and preferences as the most important factors in the decision.

Demand

cost-plus pricing

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.

The money or other consideration (including other products and services) exchanged for the ownership or use of a product is known as ______.

price

Charging different prices to different buyers for goods of like grade and quality is known as ______.

price discrimination

Price fixing is the conspiracy among firms to _____.

set prices for a product

Price is defined as

the money or other considerations exchanged for the ownership or use of a product.

market share

the ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself)

Profit = (____ x quantity sold) - (fixed cost + variable cost)

unit price

Deceptive Pricing

-ex: bait and switch -outlawed by the Federal Trade Commission.

three other key factors that influence demand

1. consumer tastes 2. Price and availability of similar products 3. Consumer income

break-even analysis

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

price discrimination

The Clayton Act as amended by the Robinson-Patman Act prohibits price discrimination—the practice of charging different prices to different buyers for goods of like grade and quality.

Which of the following is an example of deceptive pricing?

a bait an switch to lure customers into the store to sell them a higher priced product

Demand-oriented pricing approaches weigh which factors most heavily?

expected customer tastes and preferences

A demand curve enables a firm to examine prices ______.

in terms of quantity sold

Pricing objectives involves specifying the role of price in what two areas of an organization?

its strategic plans its marketing plans

Price fixing, price discrimination, and predatory pricing are ______.

legally prohibited

Organizations choosing competitor-oriented approaches to set prices might use which two pricing strategies?

loss-leader pricing customary pricing

Marketing managers may identify profit, market share, social responsibility, or even survival as pricing ______.

objectives

break even point

the quantity at which total revenue and total cost are equal.

unit volume

the quantity produced or sold, as a pricing objective

Unit price times quantity sold is ______.

total revenue

Break-even analysis analyzes the relationship between which two at various levels of output?

total revenue total cost

According to the profit equation, profit is ______.

total revenue minus total cost

inelastic demand

when a 1 percent decrease in price produces less than a 1 percent increase in quantity demanded, thereby actually decreasing total revenue.

Four common approaches to helping find this approximate price level

(1) demand-oriented, (2) cost-oriented (3) profit-oriented (4) competition-oriented

demand curve

A graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price.

pricing constraints

Factors that limit the range of prices a firm may set.

__cost is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. (one word)

Fixed

How does a skimming pricing strategy approach price setting?

Prices are set high initially and then lowered in a series of steps.

profit equation

Profit = Total revenue − Total cost; or Profit = (Unit price × Quantity sold) − (Fixed cost + Variable cost).

presitige pricing

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

above-, at-, or below-market pricing

Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark.

customary pricing

Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

bundle pricing

The marketing of two or more products in a single package price.

Price (P)

The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

total revenue (TR)

The total money received from the sale of a product.

_______ discounts are also known as functional discounts.

Trade

What factors must be taken into consideration to determine the "right" price for a product?

Will the product provide a profit for the company? Will it generate enough sales dollars to pay for the marketing of the product? What are customers willing to pay for the product? Will enough money be made to pay for the development and production of the product?

A one-price policy means there is one price for ______.

all buyers of the product

Demand-oriented, cost-oriented, profit-oriented, and competition-oriented are four approaches used to set ______.

approximate price levels

Four approaches used to set ______ are oriented around demand, cost, profit, and competition.

approximate price levels

Break-even analysis analyzes the relationship between total revenue and total cost to determine profitability ______.

at various levels of output

A used car dealer advertises a $5,000 SUV for sale in the local paper. When prospective customers arrive at the dealership they are told that the $5,000 SUV is sold and are offered a $15,000 SUV instead. This is an example of ______.

bait and switch

Small changes in price ______.

can have comparably big effects on company profit

predatory pricing

charging a very low price for a product with the intent of driving competitors out of business.

If firms set prices with specific consideration of firms challenging them directly for customers, they have adopted a ________ approach to pricing.

competition-oriented

A pricing constraint firms face is the price that its _________ are currently charging and likely to charge in the future.

competitors

Factors that limit the range of prices a firm may set are known as pricing ______.

constraints

The demand for a product class, a product, or a brand, or the newness of a product can act as pricing ________ to limit a firm's options.

constraints

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are known as ______ approaches.

cost-oriented

Select all of the following that are common approaches to setting an approximate price level for a product.

cost-oriented competition-oriented demand-oriented profit-oriented

Common approaches to pricing are oriented around which four elements?

demand competition profit cost

A demand curve is derived by measuring how many units of a product are sold at various ______.

levels of price

Price Equation

list price - incentives and allowances + extra fees

how to set prices

looking at the production and marketing costs and then adding enough to cover direct expenses, overhead, and profit.

Price deals that _____ fall into the category of deceptive pricing.

mislead consumers

A marketing manager considers pricing objectives and constraints to ______.

narrow the range of choices among the variety of pricing strategies

Pricing ________ frequently reflect corporate goals, while pricing ________ often relate to conditions existing in the marketplace.

objectives; constraints

A ________ policy is also known as fixed pricing.

one price

Which of the following are pricing practices that are legally restricted?

predatory pricing price fixing

The money or other considerations exchanged for the ownership or use of a product or service is its

price

The money or other considerations exchanged for the ownership or use of a product or service is its __.

price

If a firm sells the same product to different buyers at different prices, it may be considered ________.

price discrimination

The percentage change in quantity demanded relative to a percentage change in price is known as ______.

price elasticity of demand

The practice of colluding with other firms to set prices is called ______.

price fixing

A firm must know its competitors' ________ in order to best set its own.

prices

Cost-oriented approaches to pricing consider which three things in the setting of a product's price?

profit overhead production costs

By focusing on target profit pricing or target return pricing, a firm is using a ________ pricing approach.

profit-oriented

Reductions in unit costs for a larger order are known as discounts.

quantity

Which of the following are reductions in unit costs for a large order?

quantity discounts

Total___ is equal to the unit price for a product times the quantity of it sold.

revenue

A firm's goal in offering a trade discount is to _____.

reward wholesalers and retailers for marketing functions

When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use a ________ pricing strategy.

skimming

In what pricing strategy are prices lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices?

skimming pricing

Which two are profit-oriented approaches to setting a price?

target profit pricing target return pricing

fixed cost (FC)

the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

variable cost (VC)

the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold

The ratio of perceived benefits to price is a product's .

value

The relationship, or ratio, between a product's perceived benefits and the consumer's costs is known as its ______.

value

Elastic demand

when a 1 percent decrease in price produces more than a 1 percent increase in quantity demanded, thereby actually increasing total revenue.

price fixing

A conspiracy among firms to set prices for a product is termed price fixing -illegal under Sherman Act

standard markup pricing

Adding a fixed percentage to the cost of all items in a specific product class.

penetration pricing

Setting a low initial price on a new product to appeal immediately to the mass market.

target return-on-sales pricing

Setting a price to achieve a profit that is a specified percentage of the sales volume.

target-return-on-investment pricing

Setting a price to achieve an annual target return on investment (ROI).

target profit pricing

Setting an annual target of a specific dollar volume of profit.

odd-even pricing

Setting prices a few dollars or cents under an even number.

skimming pricing

Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.

Pricing Objectives

Specifying the role of price in an organization's marketing and strategic plans.

price elasticity of demand

The percentage change in quantity demanded relative to a percentage change in price.

Barter

The practice of exchanging products and services for other products and services rather than for money.

value pricing

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price.

value

The ratio of perceived benefits to price; or Value = (Perceived benefits ÷ Price) -for a given price, as perceived benefits increase, value increases.

When a buyer arrives at a retail location and is told that the product she saw in a promotion is out of stock and no rainchecks are available, the retailer might be accused of ______.

bait and switch

Price elasticity of demand is expressed as percentage change in ________ divided by the percentage change in ________.

quantity demanded; price

Customers are encouraged to buy a larger number of a single product when a firm offers ______.

quantity discounts

Fixed costs ______.

remain at the same level despite changes in production

total cost (TC)

the total expense incurred by a firm in producing and marketing a product. Total cost is the sum of fixed cost and variable cost.