Chapter 10 Key Terms

competitor-based pricing strategies

This approach might lead the marketing manager to decide to price at some mar¬ket average price, or perhaps above or below it in the context of penetration or skimming objectives.

markup on costs

the additional to the price of an offering after cost have been considered

just noticeable difference

the amount of price increase that can be taken without impacting customer demand

price elastic¬ity of demand

the measure of customers' price sensitivity estimated by dividing relative changes in quantity sold by relative changes in price

markup on sales price

using the sales price as a basis for calculating the markup percentage

stability pricing

a firm attempts to find a neutral set point for price that is neither low enough to raise the ire of competition nor high enough to put the value proposition at risk with customers.

cash discounts

a percentage discount off invoice to elicit quicker payment by the customer

target return pricing

a pricing decision made by considering fixed and variable costs and then demand forecasting to determine the price per unit

average cost pricing

a pricing decision made by identifying all costs associated with an offering to come up with what the average cost of a single unit might be

reference pricing

a pricing strategy in which a firm gives customers comparative prices when considering purchase of a product so they are not viewing a price in isolation from prices of other choices

high/low pricing

a pricing strategy in which the retailer offers frequent discounts primarily through sales promotions to stated regular prices

Product line pricing - price lining

a pricing tactic in which a firm affords the marketing manager an opportunity to develop a rational pricing approach across a complete line of related items

variable pricing

a pricing tactic in which customers are allowed or encouraged to haggle about prices

price bundling

a pricing tactic in which customers are given the opportunity to purchase the package deal at a reduced price compared to what the individual components of the package would cost separately

auction pricing

a pricing tactic in which individuals competitively bid against each other and the purchase goes to the highest bidder

even pricing

a pricing tactic in which the price is expressed in whole dollar increments

one price strategy

a pricing tactic in which the price marked on a good is what it typically sells for

captive pricing (complementary pricing)

a pricing tactic of gaining a commitment from a customer to a basic product or system that requires continual purchase or peripherals to operate

everyday low pricing

a pricing tactic that entails relatively low constant prices and minimal spending on promotional efforts

Prestige pricing

a pricing tactic that lands Prestige to a product or brand by virtue of a price relatively higher than the competition

allowances

a remittance of monies to the consumer after the purchase of the product

price skimming

addresses the objective of entering a market at a relatively high price point.

trade discounts

and incentive to a channel member for performing some function in the channel that benefits the seller

Pricing objectives

are the desired or expected result asso¬ciated with a pricing strategy

bait and switch

when a seller advertises a low price but has no intent to actually make the lower-priced item available for sale

price-fixing

when companies collude to set prices at a mutually beneficial high level

reverse auctions

when sellers bid prices to buyers and the purchase typically goes to the lowest bidder

zone pricing

when shippers set up geographic pricing zones based on the distance from the shipping location

uniform delivered pricing

when the same delivery fee is charged to customers regardless of geographic location within a set area

odd pricing

will a pricing tactic in which the price is not expressed in the whole dollar increments

value pricing strategy

Firms that have an objective of utilizing pricing to com¬municate positioning ...overtly attempts to consider the role of price as it reflects the bundle of benefits sought by the customer.

penetration pricing

In markets where customers are sensitive to price and where internal efficiencies lead to cost advantages allowing for acceptable margins even with aggressive pricing, a penetration objective can create a powerful barrier to market entry for other firms, thus protecting market share.

cost plus pricing

building a price by adding standardized markup on top of the cost associated with the offering

psychological pricing

creating a perception about Christ merely from the inmates the numbers provide the customer

FOB free onboard pricing

determination of title transfer and freight payment based on shipping location

discounts

direct immediate reduction in price provided to purchasers

quantity discounts

discounts taken off and in boys price based on different levels of product purchased

seasonal discounts

discounts that reward the purchaser for shifting part of the inventory storage function away from the manufacturer

cost leadership

firms that are able to compete based on some extraordinary efficiency in one or more internal processes bring to the market a competitive advantage based on cost.

deceptive pricing

knowingly stating prices in a manner that gives a false impression to customers

fair trade laws

laws designed to allow manufacturers to establish artificially high prices by limiting the ability of wholesalers and retailers to offer reduced or discounted prices

minimum markup laws

laws that require retailers to apply a certain percentage of markup to their products for sale

price discrimination

occurs when a seller offers different prices to different customers without a substantiative basis, such that competition is reduced

price points

prices established to convey the differences and benefits offered as the customer moves up and down the product line

loss leader products

product sacrificed at prices below cost and effort to attract shoppers to the retail location

promotional allowances

sales promotions initiated by the manufacturer and carried out by the retailer who is then compensated by the manufacturer

target return on investment (R.O.I) pricing strategy

Pricing objectives very frequently are designed for profit maximization, which necessitates a target return on investment (R.O.I) pricing strategy