Chapter 10: Pricing Decisions

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External Reference Price

A comparison price provided by others

Allowance

A concession in price to achieve a desired goal

Demand Curve

A graph of the quantity of a product taken by buyers in the market at various prices, given that all other factors are held constant

Internal Reference Price

A price developed in the buyer's minds through experience with the product

Seasonal Discount

A price reduction given to buyers for purchasing goods or services out of season

Trade (Functional) Discount

A reduction off the list price given by a producer to an intermediary for performing certain functions

Cost-Plus Pricing

Adding a specified dollar amount or percentage to the seller's cost. Also known as markup pricing

Special-Event Pricing

Advertising sales or price cutting linked to a specific event

Differential Pricing

Charging different prices to different buyers for the same quality and quantity of product

Price Skimming

Charging the highest possible pricing that buyers who most desire the product will pay

Value-Conscious

Concerned about price and quality of a product

Quantity Discounts

Deductions from list price for purchasing large quantities

Prestige Sensitive

Drawn to products that signify prominence and status

Non-Price Competition

Emphasising factors other than price to distinguish a product from competing brands

Price Competition

Emphasising price and matching or beating competitor's prices

Odd-Even Pricing

Ending the price with certain numbers to influence buyer's perceptions of the price or product

Negotiated Pricing

Establishing a final price through bargaining

Product-Line Pricing

Establishing and adjusting prices of multiple products within a product line

Professional Pricing

Fees set by people with great skill or experience in a particular field

Pricing Objectives

Goals that describe what a company wants to achieve through pricing

Bundle Pricing

Packaging together two or more complementary products and selling them for a single price

Multiple-Unit Pricing

Packaging together two or more identical products and selling them for a single price

Cash Discount

Price reduction gives to buyers for prompt payment or cash payment

Reference Pricing

Pricing a product at a moderate level and displaying it next to a more expensive model or brand

Bait Pricing

Pricing an item in the product line low with the intention of selling a higher-priced item in the line

Value-Based Pricing

Pricing based on the level of benefits the product offers

Competition-Based Pricing

Pricing influenced primarily by competitors prices

Customary Pricing

Pricing on the basis of tradition

Psychological Pricing

Pricing that attempts to influence a consumer's perception of a price to make a product's price more attractive

Captive Pricing

Pricing the basic product in a product item low while pricing related items at a higher level

Premium Pricing

Pricing the highest-quality or most versatile products higher than other models in the product line

Price Leader

Product priced below the usual markup, near cost or below cost

Tensile Pricing

Refers to a broad statement about price reductions as opposed to detailing specific price discounts

Price Lining

Setting a limited number of prices for selected groups or lines of merchandise

Everyday Low Prices (EDLP)

Setting a low price for products on a consistent basis

Comparison Pricing

Setting a price at a specific level and comparing it with a higher price

Secondary-Market Pricing

Setting one price for the primary target market and a different price for another market

Penetration Pricing

Setting price below those of competing brands to penetrate a market and gain a significant market share quickly

Prestige Pricing

Setting prices at an artificially high level to convey prestige or a quality image

Price-Conscious

Striving to pay low prices

Random Discounts

Temporary reduction of prices on an unsystematic basis

Periodic Discounts

Temporary reductions of prices on a patterned or systematic basis

Price

Value exchanged for products in a marketing transaction


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