Mymaketinglab Ch. 9

first

Designing a good product is the __________ step in cost-based pricing.

value-added pricing

attaching features and services to differentiate a company's offers and charging higher prices.

Customer value-based pricing

is based on a buyer's perceptions of value rather than on the seller's cost.

Good-value pricing

is offering just the right combination of quality and good service at a fair price.

Market-skimming pricing

is setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

Product line pricing

is setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.

Price

is the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service

Designing products to deliver the desired value at a target price

is the fourth step in value-based pricing

Setting a target price to match the customer's perceived value

is the second step in value-based pricing.

Determining costs that can be incurred

is the third step in value-based pricing.

Fixed costs

is/are costs that do not vary with production or sales level.

Variable costs

is/are costs that vary directly with the level of production

Total costs

is/are the sum of the fixed and variable costs for any given level of production.

Target costing

pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.

Cost-based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

A demand curve

shows the number of units the market will buy in a given time period, at different prices that might be changed.

Price elasticity

a measure of the sensitivity of demand to changes in price.

Market-penetration pricing

setting a low price for a new product in order to attract a large number of buyers and a large market share.

Captive-product pricing

setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.

psychological pricing

the price is used to say something about the product.