Marketing Exam 4 Part 2

What is the definition of price in marketing?

Is the money exchanged for something of value, as perceived by consumers.

What is the basic pricing formula?

List Price − Discounts − Allowances + Extra Costs = Final Price

What is a quantity discount?

A reduction in price for buying in bulk.

What is a seasonal discount?

A lower price offered during the off-season.

What is a cash discount?

A lower price for paying immediately or in cash.

What is a trade-in allowance?

Money taken off the price when a customer returns an old item.

What are the additional costs that can affect the final price?

Transportation, taxes, tariffs, and handling costs.

What are the different types of value that customers perceive in a product?

Physical goods, services, assurance, repair facilities, packaging, warranty, and psychic benefits.

What are profit-oriented pricing objectives?

Objectives focused on making money, including target return and maximizing profits.

What are sales-oriented pricing objectives?

Objectives aimed at increasing sales volume, including dollar sales growth and market share growth.

What is a one-price policy?

A pricing strategy where everyone pays the same price, often used for convenience goods.

What is a flexible-price policy?

A pricing strategy where different customers pay different prices, allowing for negotiation.

What is the risk of too much price cutting?

It can erode profits, requiring significantly more sales to maintain profit margins.

What is introductory pricing?

A strategy used when a product first launches to recover high development costs.

What is a skimming price strategy?

Charging a high price initially for a new or unique product to maximize early profits.

What is a penetration pricing strategy?

Charging a low price initially to attract many buyers quickly and gain market share.

What are geographic pricing policies?

Pricing strategies that vary based on shipping regions, such as FOB and zone pricing.

What is price fixing?

An illegal agreement between competitors to set prices at a certain level.

What is dumping in pricing?

Selling products below cost to eliminate competition.

What is price discrimination?

Charging different prices to different buyers unfairly, regulated by the Robinson-Patman Act.

What is break-even analysis?

A method to evaluate selling prices by determining how many units must be sold to cover costs.

What is the break-even volume formula?

Total Fixed Costs / (Price - Variable Cost Per Unit)

What does a break-even chart compare?

Total Revenue and Total Cost against Units of Production.

What is total revenue?

Price × Quantity.

What is total cost?

Total Variable Cost (TVC) + Total Fixed Cost (TFC).

What is the average fixed cost formula?

Total Fixed Cost (TFC) ÷ Quantity (Q).

What is the average variable cost?

The variable cost per unit, which changes with production.

What is the total variable cost formula?

Average Variable Cost (AVC) × Quantity (Q).

What is profit in pricing?

Total Revenue (TR) - Total Cost (TC).