CH. 15 Pricing Strategy

These flashcards cover key vocabulary and concepts related to pricing strategies in business, drawn from the lecture notes.

Pricing Strategy

The plan or method used to set prices for a product or service.

Skimming Pricing

A pricing strategy where a company sets a high price initially to maximize revenue from early adopters.

Penetration Pricing

A pricing strategy where a company sets a low initial price to attract customers and gain market share.

Cost-Based Pricing

Setting prices based on the costs of production plus a markup for profit.

Demand-Based Pricing

Pricing set according to the level of demand for the product.

Prestige Pricing

Setting an artificially high price to indicate high quality and maintain a premium image.

Odd-Even Pricing

Pricing items just below a whole number (e.g., $9.99 instead of $10) to make them appear cheaper.

Loss Leader Strategy

Pricing an item below cost to attract customers to other products.

Bundling

Selling multiple products together at a lower price than buying items separately.

Product Life Cycle

The progression of a product through stages: introduction, growth, maturity, and decline.

Introduction Stage

The first phase of the product life cycle where awareness and adoption are built.

Growth Stage

The phase where sales increase rapidly as consumers adopt the product.

Maturity Stage

The phase where sales growth slows and stabilizes, often leading to price competition.

Decline Stage

The final phase where sales decrease, often leading to product discontinuation.

Shakeout

A process during the product life cycle where weaker competitors exit the market.

Mark-Up

The amount added to the cost of a product to determine its selling price.

Retailer Mark-Up

The difference between the cost price and the selling price set by a retailer.

Dynamic Pricing

A flexible pricing strategy where prices are adjusted based on market demand.

Revenue Management

The practice of using data to set prices based on anticipated consumer demand.

High Price and Quality Correlation

The perception that higher prices usually indicate higher quality.

Slotting Fee

A payment made by manufacturers to retailers to secure shelf space.

Market Share

The portion of a market controlled by a particular company or product.

Advertising Costs

Expenses associated with promoting a product to increase consumer awareness.

Competitive Advantage

An attribute that allows a company to outperform its rivals.

Sales Plateauing

A stage in the maturity life cycle where sales levels off after growth.

Consumer Preferences

The tastes and preferences that influence consumer purchasing decisions.

Sophisticated Products

Items that incorporate advanced features or technology.

Product Differentiation

Creating distinct features in a product to stand out from competitors.

Price Wars

A competitive struggle where rival companies continuously lower their prices.

High Selling Price

Charging a premium to signify value or exclusivity.

Sales Volume

The quantity of products sold over a specific period.

Sustainable Competitive Advantage

An enduring edge over competitors that can be maintained over time.

Retain Customers

Strategies employed to keep existing customers engaged and satisfied.