Final Exam: Essay Section Vocabulary

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

Cost-Based Pricing

The processs of setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

Fixed Costs

Costs that do not vary with production or sales level

Variable Costs

Costs that vary directly with the level of production

Captive-Product Pricing

Setting a price for products that must be used along with a main product

Two-Part Pricing

Charging a fixed fee with an additional variable usage fee

Cost-Plus Pricing

Adding a standard markup to the cost of the product

Product Line Pricing

Setting the price steps between various products in a product line based on cost difference between the products, customer evaluations of different features, and competitors’ prices

Optional-Product Pricing

The pricing of optional or accessory products along with a main product

Captive-Product Pricing

Setting a price for products that must be used along with a main product

By-Product Pricing

Setting a price for by-products to help offset the costs or disposing of them and help make the main product’s price more competitive

Product Bundle Pricing

Combining several products and offering the bundle at a reduced price

Advertising

Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor

Advertising Strategy

The strategy by which the company accomplishes its advertising objectives

Advertising Budget

The dollars and other resources allocated to be a product or a company advertising program

Public Relations

Helps build and maintain a positive image for a company or brand