Pricing Strategies and Definitions

Flashcards covering key concepts about pricing strategies, definitions, and factors affecting pricing decisions.

Price

The amount of money charged for a product or service; the sum of all values exchanged by customers.

Importance of Pricing

Pricing is crucial for revenue generation and capturing customer value.

Customer Value-Based Pricing

Pricing based on buyers’ perceptions of value rather than the seller's cost.

Good-Value Pricing

Setting an affordable price while maintaining quality.

Everyday Low Pricing (EDLP)

Consistently low prices without frequent sales promotions.

High-Low Pricing

Offering higher prices normally, with periodic promotions offering discounts.

Value-Added Pricing

Adding features or services to differentiate and justify higher prices.

Cost-Based Pricing

Pricing based on the costs of producing, distributing, and selling a product.

Cost-Plus Pricing

Setting prices by adding a markup to the cost of goods.

Break-even Pricing

Setting prices to cover costs, ensuring no profit or loss.

Target Return Pricing

Setting prices to achieve a specific return on investment.

Competition-Based Pricing

Setting prices based on competitors’ strategies and market conditions.

Pure Competition

A market structure with many firms selling identical products.

Monopolistic Competition

A market structure with many firms selling similar but differentiated products.

Oligopolistic Competition

A market structure dominated by a few large firms.

Pure Monopoly

A market structure with a single firm controlling the entire market.

Consumer Price Sensitivity

How responsive consumers are to changes in price.

Price Elasticity of Demand

A measure of how much the quantity demanded changes with a price change.

Internal and External Factors

include overall marketing strategy, organizational considerations, market conditions, and consumer demand.