marketing test 3

value pricing

the practice of simultaneously increasing product benefits while maintaining or decreasing price

skimming pricing

setting the highest initial price that customers who really desire the product are willing to pay when introducing a new or innovative product

penetration pricing

setting a low initial price on a new product to appeal immediately to the mass market

prestige pricing

setting a high price so that quality or status conscious consumers will be attracted to the product and buy it

odd-even pricing

setting prices a few dollars or cents under an even number

bundle pricing

marketing two or more products for a single package price

standard markup pricing

adding a fixed percentage to the cost of all items in a specific product class

cost-plus pricing

calculating the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price

target return-on sales pricing

setting prices to achieve a profit that is a specified percentage of sales revenue

target return-on investment pricing

setting prices to achieve an annual target return on investment (ROI)

competition-oriented pricing approaches

methods for setting price that focus on competition

customary pricing

setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors

above, at, or below-market pricing

setting a market price for a product or product class using the average market price as the benchmark- pricing above, at, or below market level

loss-leader pricing

selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they will buy other products with large markups as well

demand curve

a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price.

price elasticity of demand

the percentage change in quantity demanded relative to a percentage change in price

total revenue

the total money received from the sale of a product - the product of price and quantity

fixed cost

the sum of the expenses that do not change with the quantity sold

variable cost

the sum of the expenses that vary directly with the quantity of a product that is produced and sold

unit variable cost

variable cost expressed on a per unit basis

total cost

the total expense incurred to produce and market a product

break-even analysis

a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

break-even analysis

a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

price fixing

a conspiracy among firms to set prices for a product

price discrimination

the practice of charging different prices to different buyers for goods of like grade and quality

deceptive pricing

price deals that mislead consumers

bait and switch

when a firm offers a very low price on a product (the bait) to attract customers to a store and then tricks the customer into purchasing a higher-priced (the switch)

predatory pricing

charging a very low price for a product with the intent of driving competitors out of business

everyday low pricing (EDLP)

replacing promotional allowances with lower manufacturer list prices - aimed at decreasing the average price consumers pay by minimizing promotional allowances

marketing channel

network of individuals and firms that make a producer’s product available to end users

intermediary (or middleman)

an individual or firm that assists manufacturers in distributing products to end users by helping promote, sell, and distribute its products

wholesaler

an intermediary who sells to other intermediaries, usually retailers

retailer

an intermediary who sells to consumers

agent or broker

an intermediary with the legal authority to act on behalf of the manufacturer- their role is to bring buyers and sellers together

direct channel

a marketing channel with no intermediaries between the producer and the end user

indirect channel

a marketing channel with at least one intermediary between the producer and the end user

dual distribution

strategy of using two or more channels to reach different buyers of the same product

multichannel marketing (or omnichannel marketing)

strategy of combining mutually reinforcing communication and delivery channels to attract, retain, and build relationships with consumers who shop traditional and online channels

vertical conflict

conflict between different levels in a channel

horizontal conflict

conflict between intermediaries at the same level in a marketing channel

advertising

any paid form of nonpersonal communication by an identified sponsor about an organization or a product

product advertisement

advertisement that focuses on selling a product

institutional advertisement

advertisement designed to build goodwill or a positive image for an organization rather than to promote a specific product

pioneering (or informational) advertisement

advertisement used to launch a new product category by informing people what a product is, what it can do, and where it can be found

competitive (or persuasive) advertisement

advertisement used to promote a specific brand based on that brand’s features and benefits

comparative advertisement

form of a competitive advertisement that shows a brand’s strengths relative to those of competitors

reminder advertisement

advertisement used to reinforce previous knowledge of a product

reinforcement advertisement

form of a reminder advertisement used to assure users of the product that they made the right choice