Foundations of Marketing: Pricing Concepts and Management

These flashcards cover essential terminology and definitions related to pricing concepts and management in marketing.

Price Competition

Emphasizing price as an issue and matching or beating competitors’ prices.

Nonprice Competition

Emphasizing factors other than price to distinguish a product from competing brands.

Pricing Objectives

Goals that describe what a firm wants to achieve through pricing.

Survival Pricing

Temporarily setting prices low, at times below costs, to attract more sales.

Profit Maximization

Setting profit objectives that owners and decision makers view as satisfactory.

Return on Investment (ROI)

How much money you make on an investment after accounting for its costs.

Market Share

A product’s sales in relation to total industry sales.

Cash Flow Objective

Setting prices to recover cash as quickly as possible.

Product Quality Objective

Attaining high product quality, which is generally more expensive for the firm.

Status Quo Objective

Focusing on maintaining market share, meeting competitors’ prices, or price stability.

Assessment of Price Evaluation

The importance of price varies depending on product type, target market, and purchase situation.

Demand Curve

A graph of the quantity of products a firm expects to sell at various prices.

Price Elasticity of Demand

A measure of sensitivity of demand to changes in price.

Marginal Cost (MC)

The extra cost incurred by producing one more unit of a product.

Total Cost

The sum of average fixed and average variable costs times the quantity produced.

Average Total Cost

The sum of the average fixed cost and the average variable cost.

Breakeven Point

The point at which the costs of producing a product equal the revenue made from selling it.

Cost-Volume-Profit Analysis

Determining how changes in costs and sales volume impacts profits.

Elastic Demand

When a percentage change in price leads to a larger percentage change in quantity demanded.

Inelastic Demand

When a percentage change in price leads to a smaller percentage change in quantity demanded.

Cost-Based Pricing

Adding a dollar amount or percentage to the cost of the product.

Markup Pricing

Adding a predetermined percentage to the cost of the product.

Margin

The percentage of revenue left over after paying costs.

Demand-Based Pricing

Pricing based on the level of demand for the product.

Competition-Based Pricing

Pricing influenced primarily by competitors’ prices.

Price Skimming

Charging the highest price that buyers willing to pay.

Penetration Pricing

Setting prices below those of competing brands to gain market share quickly.

Differential Pricing

Charging different prices to different buyers for the same quality and quantity.

Negotiated Pricing

Establishing a final price through bargaining between seller and customer.

Periodic Discounting

Temporary reduction of prices on a patterned basis.

Random Discounting

Temporary reduction of prices on an unsystematic basis.

Psychological Pricing

Pricing that attempts to influence a customer’s perception of price.

Odd-Even Pricing

Ending the price with certain numbers to influence buyer perceptions.

Bundle Pricing

Packaging two or more products together and selling them at a single price.

Everyday Low Pricing (EDLP)

Setting a low price consistently to instill confidence in receiving a good deal.

Subscription Pricing

Charging a recurring fee for the product.

Captive Pricing

Pricing the basic product low while pricing related items higher.

Promotional Pricing

Pricing methods used to increase sales volume by cutting prices temporarily.

Comparison Discounting

Setting a price at a specific level and comparing it with a higher price.

Geographic Pricing

Reductions for transportation and other costs related to distance between buyer and seller.

Trade Discount

A deduction from the list price offered to marketing intermediaries.

Quantity Discount

Price reduction given to customers who buy in large quantities.

Cash Discount

Incentive for prompt payment.

Seasonal Discount

Price reduction for purchases made out of season.