marketing test 4

What is the primary goal of profit objectives in pricing?

Maximize profits across an entire portfolio or per product.

What are sales/market share objectives in pricing?

Maximize dollar/unit sales or grow market share.

What is competitive-effect pricing?

Pricing based on the competition's pricing (above, below, or same).

How does customer satisfaction influence pricing?

Pricing reflects perceived value; tactics include discounts, bundles, loyalty programs.

What is the purpose of image enhancement objectives in pricing?

Price communicates quality and status.

What does demand refer to in pricing?

Quantity consumers are willing/able to buy at a given price in a given time.

What does the Law of Demand state?

If price goes up, quantity demanded goes down.

What causes an upward shift in demand?

Product improvements, positive publicity, trends coming back in style.

What causes a downward shift in demand?

Negative publicity, a trend falling out of style.

What is elastic demand?

Consumers are highly sensitive to price changes; price change causes a substantial change in quantity demanded.

What is inelastic demand?

Price change has little or no effect on quantity demanded.

What is the price elasticity of demand if it is greater than 1?

Elastic.

What is cross-elasticity of demand?

Price change of one product affects demand for another.

What happens to the demand for complements if the price of one goes up?

Demand for both decreases.

What are variable costs?

Per-unit costs that fluctuate with production volume.

What are fixed costs?

Costs that don't change with units produced.

What is total cost?

Fixed costs plus variable costs.

What does break-even analysis determine?

The sales volume needed to cover total costs and begin turning a profit.

What is the break-even point?

Where total cost equals total revenue.

What is contribution per unit?

Selling price minus variable cost.

What is cost-plus pricing?

Totals all costs then adds a markup.

What is keystone pricing?

Retailer doubles the cost (100% markup).

What is target costing?

Identify desired price first, then design the product to meet it.

What is yield management pricing?

Charge different prices to different customers to manage capacity.

What is peak load pricing?

Higher prices during high-demand periods.

What is surge pricing?

Raises price as demand goes up, lowers as demand declines.

What is price segmentation?

Different prices to different market segments for the same product.

What is skimming pricing?

High initial price to recover R&D costs, then reduce later.

What is penetration pricing?

Very low intro price to gain market share and discourage competitors.

What is trial pricing?

Low price for a limited time to reduce risk, then increases after intro period.

What is everyday low pricing (EDLP)?

Consistent reasonable prices daily.

What is high/low (promo) pricing?

Higher base prices but frequent heavy discounts.

What is two-part pricing?

Two separate payments.

What is payment pricing?

Total price broken into smaller amounts over time.

What is subscription pricing?

Periodic fee for product access.

What is decoy pricing?

Three options where one 'decoy' steers buyers to the seller's preferred choice.

What is price bundling?

Two or more items sold together for one price less than buying individually.

What is captive pricing?

One item sold cheap, profit made on essential companion item.

What is F.O.B. factory pricing?

Customer pays shipping.

What is F.O.B. delivered pricing?

Seller pays shipping, adds it to selling price.

What is uniform delivered pricing?

Standard shipping charge for all customers.

What is freight absorption pricing?

Seller absorbs all shipping costs.

What are trade discounts?

Set % off for each channel level.

What are quantity discounts?

Reduced prices for larger purchases.

What is a cash discount?

A discount for paying a bill quickly.

What is a seasonal discount?

Price reductions during certain times of the year.

What is an internal reference price?

The price range in a consumer's mind used to evaluate products.

What is the assimilation effect?

When prices are close, consumers perceive quality as similar.

What is the contrast effect?

When prices are far apart, consumers equate the gap with a big quality difference.

What is the price-placebo effect?

Discount buyers may feel less satisfaction than full-price buyers.

What is odd-even pricing?

Prices ending in 99 increase sales by 21-34%.

What is price lining?

A limited number of specific price points in a product line.

What is prestige pricing?

Setting an artificially high price to maintain a luxury image.

What is bait-and-switch?

An illegal practice of advertising a bargain to lure customers, then switching them to a higher-priced item.

What is loss-leader pricing?

Pricing some items very low to attract store traffic.

What is price gouging?

Charging exorbitant prices in times of extreme need.

What is price discrimination in B2B?

Selling the same product at different prices to different retailers.

What is price-fixing?

Illegal collaboration to set prices among competitors.

What is horizontal price-fixing?

Competitors agree on prices.

What is vertical price-fixing?

Manufacturers force retail prices.

What is predatory pricing?

Illegally setting very low prices to drive competitors out.

What is dynamic pricing?

Pricing that is easily adjusted to meet marketplace changes.

What is freemium pricing?

Basic version free, premium version charges for upgrades.

What is internet price discrimination?

Different online prices based on order size or location.

What is cryptocurrency?

Digital currency using cryptography on blockchains.

What is Bitcoin?

A popular cryptocurrency bought on exchanges and stored in virtual wallets.

What does BNPL stand for?

Buy-now-pay-later; get product upfront and finance over a few months.

What does SNBL stand for?

Save-now-buy-later; payments auto-drafted for future purchases.

What is a digital wallet?

Stores funds and makes transactions.

What is a mobile wallet?

An app storing credit/debit/rewards cards and coupons.

What is collaborative savings?

Group members pool funds to help each other with expenses.

What is P2P lending?

Borrowing from investors through online platforms.

What is rent-to-own?

Rent an item and own it after the rental period.

What is physical distribution?

Activities moving finished goods from manufacturers to final customers.

What is a direct channel?

Manufacturer distributes to end customer directly.

What is an indirect channel?

Uses channel intermediaries like wholesalers and retailers.

What is a conventional marketing system?

Channel members work independently.

What is a vertical marketing system (VMS)?

Formal cooperation among channel levels.

What is intensive distribution?

Sell through all available outlets.

What is exclusive distribution?

Single outlet per region for specialty products.

What is gray market?

Unauthorized distribution channels.

What is selective distribution?

Fewer outlets than intensive, more than exclusive.

What are the five functions of logistics?

Order processing, warehousing, materials handling, transportation, inventory control.

What is inventory turnover?

Number of times inventory cycles through in a time frame.

What is JIT inventory?

Just-in-time inventory reduces stock to very low levels.

What is cross-docking?

Products transferred directly from supplier's truck to store-bound truck.

What is outsourcing?

Obtaining outside vendors for goods/services.

What is supply chain management?

Coordinating flows among firms to maximize profitability.

What is derived demand?

B2B demand caused by consumer demand.

What is inelastic demand in B2B?

Price changes don't significantly affect quantity purchased.

What is fluctuating demand?

Small changes in consumer demand create large swings in business demand.

What is joint demand?

Demand for two or more goods used together.

What is a straight rebuy?

Routine purchase with minimal decision-making.

What is a modified rebuy?

Changes to supplier of a routine purchase.

What is a new-task buy?

A new, complex purchase requiring extensive decision-making.

What is a customer reference program?

A program where customers share success stories and recommend products to others.

What is single sourcing?

Buying from only one supplier, important for frequent deliveries or specialized products.

What is multiple sourcing?

Buying from several different suppliers as a backup if one has delivery problems.

What is reciprocity in business?

A trading partnership where two firms agree to buy from each other.

What is offshoring?

Contracting foreign companies or individuals to perform work previously done at home.