Marketing Ch. 9

demand curve

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

price elasticity

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

discount

a straight reduction in price on purchases during a stated period of time or of larger quantities.

cost plus pricing

adding a standard markup to the cost of the product.

dynamic pricing

adjusting prices continually to meet the characteristics and needs of individual customers and situations.

value added pricing

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

price

broadly defined, _____ is the sum of all of the values that consumers give up in order to gain the benefits of having or using the product or service.

product bundle pricing

combining several products and offering the bundle at a reduced price.

fixed costs

costs that do not vary with production; also called overhead

variable costs

costs that vary directly with the level of production.

price

narrowly defined, ____ is the amount of money charged for a product or service.

good value pricing

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

customer value based pricing

price is considered along with the other marketing mix variables before the marketing program is set; customer needs and value perceptions are assessed; target price is based on value perception

reference prices

prices that buyers carry in their minds and refer when they look at a given product.

psychological pricing

pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product.

target costing

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

allowance

promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

segmented pricing

selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.

market skimming pricing

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.

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.

by product pricing

setting a price for by products in order to make the main product's price more competitive.

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 videogame console.

customer value based pricing

setting price based on buyers' perceptions of value rather than on the seller's cost.

break even pricing

setting price to break even on the costs of making and marketing a product, or setting price to make a target return.

competition based pricing

setting prices based on competitors' strategies, prices, costs, and market offerings; assumes consumers base their judgments of a product's value on the prices charged by competitors for similar products.

cost based pricing

setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk; set the floor for the price that the company can charge; product driven rather than value driven

product line pricing

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.

promotional pricing

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

price

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.

optional product pricing

the pricing of optional or accessory products along with a main product.

total costs

the sum of the fixed and variable costs for any given level of production