Unit 7 Pricing Strategies
gross margin
The _____ is the difference between the cost of the product and the selling price.
Total Revenue
The anticipated quantity of the product that will be sold multiplied by the product's selling price.
FIxed Costs
The costs to the business that do not change no matter now many products are produced.
behaviors
The government attempts to prevent unfair competition by regulating businesses, prohibiting unfair pricing, and using taxation to discourage or encourage certain __.
Everyday Low Pricing
This pricing strategy sets low prices on a consistent basis with no intention of raising them or offering discounts in the future.
Patent
This protects the inventors of a new product from competition for a period of 20 years.
Loss-Leader Pricing
This pricing strategy prices items at cost to attract customers into the store.
tax
An increase in the __ on a product influences how much of a product consumers will purchase.
Encourage
By lowering taxes on alternative fuels, such as ethanol, the government hopes to ___ the use of those products.
rebate
Specific amount of money returned to the customer after the purchase is made.
Total Costs
Fixed and Variable costs combines
taxes
High ____ on tobacco and alcohol products are designed to discourage the purchase of these products
elastic
Steak is not a necessity and has many substitutes. The demand for steak is:
minimum
In order to set and effective price, maximum and __ prices for the product must be determined.
Maximizing Profits
In this objective of pricing, the business will carefully study the target market to determine how much customers will pay for the product.
inelastic
Insulin for a diabetic is a necessity and has no substitutes. The demand for insulin is:
elastic
Most products have ___ demand and will experience a change in demand when the price increases or decreases.
seasonal discounts
Offered to customers who buy during times when normal sales are low.
quantity discounts
Offered to customers who buy in large quantities.
coupons
Price reduction offered by a printed promotional certificate. This is a common sales promotion activity
trade-in allowance
Reduction in price in exchange for the customer's old product when a new one is purchased.
Salt
The law of diminishing marginal utility states that consumers will buy only so much of a given product, even though the price is low. Which of the following products is the BEST example of the Law of Diminishing Utility?
Increasing Market Share
The objective of pricing in which the business wants to have the highest possible sales volume.
price
The patent allows the inventor to have greater control of the ___ charged for the product.
Selling Price
The price at which the product is sold.
Price
The value of money or its equivalent placed on a good or service
Operating Expenses
This are all the costs associated with actual business operations. Examples include buildings, equipment, utilities, salaries, taxes, and other business expenses.
Psychological Pricing
This pricing strategy refers to techniques that create an illusion for customers or that make the product seem to be a better value that it actually is.
Price Lines
This is a pricing strategy where prices are set in distinct categories based on difference in product quality and features. It is often used by cellular services providers and satellite television companies.
Markdown
This is a reduction from the original selling price.
discounts or allowances
This is a reduction in a price given to the customer.
Sales Tax
This is a tax charged on retail sales receipts and added to the selling price by retailers
Multiple-unit Pricing
This pricing strategy involves pricing items in multiples to suggest a bargain and increase sales volume.
Prestige Pricing
This pricing strategy involves setting higher-than-average prices to suggest status and prestige.
Markup
This is an amount added to the cost of a product to determine the selling price.
Bait-and-Switch Pricing
This is an illegal pricing technique that occurs when a business advertises a low priced product with the intention of selling the consumer a higher priced product with the customer visits the store.
Net Profit
This is the difference between the selling price and all costs and operating expenses associated with the product sold.
Price Skimming
This pricing strategy is setting a very high price designed to emphasize the quality or uniqueness of the product.
Breakeven Point
This is the quantity of a product that must be sold for total revenues to match total costs at a specific price.
Seller's market or Shortage
This occurs when there is a small supply of a product (real or perceived) but a very large demand; the price will usually be high.
Buyer's Market or Surplus
This occurs with a large supply of a product exists and the demand is low; the price will also be low.
Penetration Pricing
This price strategy is setting a very low price designed to increase the quantity sold of a product by emphasizing the value.
One Price Policy
This pricing policy means that all customers pay the same price. There is no negotiation concerning the product's price.
Variable Costs
Those costs that are directly related to the quantity of the product produced.
production
To determine the minimum price, all ____, marketing, and administrative costs must be calculated.
Maintaining an Image
With this objective of pricing the business will set a price that will influence how customers view the product. Customers will consider an expensive product to be a high quality product.
Flexible Pricing
With this pricing policy, customers are allowed to negotiate the price of the product.
Special Event Pricing
With this pricing strategy, prices are reduced for a short period of time,
Price Bundling
With this pricing strategy, the price will include a combination of several related services for one price. For example, AT&T might combine high speed internet service, land-line home phone service, wireless cellular service, and television service for one price.