marketing ch/13
Prestige Prodcuts
Consumers purchase for their status rather than their functionality
Variable Products
Costs primarily labor and materials that vary with production volume
Substitute Products
Demands are Negatively Related
Pure competition
Different companies that consumers perceive as substitutable sell commodity products
Target Return Pricing
Pricing strategies designed to produce a specific return on their investment
complementary products
Products whose demands are positively related
Income Effect
Refers to the change in quantity of a prouct demanded by consumers due to a change in their income.
Maximizing Profits
Relies on Economic theory
Fixed Costs
Remain essentially the same level regardless of any changes in the volume of production
Gray Market
Employs irregular but not necessarily illegal methods, to sell goods at prices lower than those intended by the manufacturer
Customer Orientation
Explicitly invokes the concept of customer value
Cross Price Elasticity
% change in the quantity of product a demand compared with the % change in price in product b
Status Quo Pricing
Changes price only to meet those of the competition
Premium Pricing
Firms deliberately prices a product above the prices st for competing products to caputre those customers who always shop for hte best or for who price does not matter.
Elastic
Generally the product is this less than -1. Meaning a one percent decrease in a price produces more than a 1 percent increase in the quantity sold
Inelastic
Greater than -1 1 percent decrease results in less than a 1 percent increase in quantity sold
Substitution Effect
Greater the availability of substitute products, the higher the price elasticity of demand for any given product will be
Target Profit Pricing
Have a particular profit goal as their overriding concern.. Price is used to stimulate a certain level of sales at a certain profit per unit
Competitive Parity
Means they set prices that are similar to those of their major competitors
Price Elasticity of Demand
Measures how changes in a price affect the quantity of the product demanded
Monopolistic Competition
Occurs when there are many firms competing for customers in a given market but their products are differentiated
Oligopolistic Competition
Only a few firms domiane
Price
Overall sacrifice a consumer is willing to make to acquire a specific product or service.
Break Even Point
Point at which the number of units sold generates just enough revenue to equal the total costs
Contribution per unit
Price less the variable cost per unit
Demand Curve
Shows how many units of a product or service consumers will demand during a specific period of time at different prices
Total Cost
Simply the sum of the variable and fixed costs
Fair Trade
Socially responsible movement that ensures that producers receive fair prices for their products
Competitor Orientation
Strategize according to the premise that they should measure themselves primarily against the competition
Break Even Analysis
Useful technique that enables managers to examine relationship among cost, price, revenue, and profit over different levels of production and sales
Price Wars
Usually occur in oligopolistic markets, two (or more) firms lowering prices one after the other
Sales Orientation
believe increasing sales will help the firm more than will increasing profits.
Cross Shopping
pattern of buying both premium and low priced brands