Chapter 26 (Pricing Strategies)

geographical pricing

a pricing technique that makes price adjustments because of the location of the customer for delivery of products.

markup pricing

adding an amount (markup) to the cost of goods to reach a selling price; the simplest pricing method; usually a percentage of cost.

one-price policy

all customers are charged the same price for the goods and services offered for sale

everyday low prices

low prices that are set on a consistent basis with no inention of raising them or offering discounts in the future

rebate

A cash refund given for the purchase of a product during a specific period

cash discount

A deduction that a vendor allows on the invoice amount to encourage prompt payment (ex. 2/10, n 30)

odd-even pricing

A price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality

penetration pricing

A pricing policy whereby a firm charges a relatively low price for a product initially as a way to reach the mass market

cost-plus pricing

All costs and expenses are calculated and then the desired profit is added to arrive at a price

loss leader

An item priced at or below cost to draw customers into a store.

flexible-price policy

Offering the same product and quantities to different customers at different prices.

bundle pricing

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

psychological pricing

Pricing technique based on the belief that customers form their perceptions of products their perceptions affect customer buying decisions. (such as EDLP or odd-even pricing)

RFID

Radio Frequency Identification, used to communicate pricing and inventory (tiny chips are embedded into products)

skimming pricing

Setting the highest initial price that customers really desiring the product are willing to pay.

price lining

Setting the price of a line of products at a number of different specific pricing points.

promotional pricing

Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

segmented pricing strategy

Two or more different prices for a product, even though there is no difference in the item's cost.

trade discount

a discount from the list price of a commodity allowed by a manufacturer or wholesaler to a merchant (usually stated as a percentage)

seasonal discount

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

smart pricing

allows marketers to make intelligent pricing decisions based on an enormous amount of data (looking at historical sales data, then giving company ability to adjust pricing based on market conditions)

prestige pricing

setting a rather high price to suggest high quality or high status