Nature and Importance of Price

These flashcards cover key concepts related to pricing strategies, the product life cycle, and various marketing terms from the lecture on pricing and product management.

Price

The money or other considerations exchanged for ownership or use of a product or service.

Barter

The practice of exchanging products and services for other products and services rather than for money.

Value

The ratio of perceived benefits to price.

Value Pricing

The practice of increasing product and service benefits while maintaining or decreasing price.

Profit Equation

Profit = Total revenue − Total cost.

Skimming Pricing

Setting the highest initial price that customers are willing to pay for a new or innovative product.

Penetration Pricing

Setting a low initial price on a new product to appeal to the mass market.

Prestige Pricing

Setting a high price to attract quality- or status-conscious consumers.

Odd-Even Pricing

Setting prices a few dollars or cents under an even number.

Bundle Pricing

Marketing of two or more products in a single package price.

Standard Markup Pricing

Adding a fixed percentage to the cost of all items in a product class.

Cost-Plus Pricing

Summing total unit cost and adding a specific amount to determine the price.

Target Profit Pricing

Setting an annual target of a specific dollar volume of profit.

Target Return-on-Sales Pricing

Setting a price to achieve a specified percentage profit of sales volume.

Target Return-on-Investment Pricing

Setting a price to achieve an annual target return-on-investment (ROI).

Customary Pricing

Setting a price dictated by tradition or competitive factors.

Above-, At-, or Below-Market Pricing

Setting a market price based on competitors' prices as a benchmark.

Loss-Leader Pricing

Selling a product below its usual price to attract customers for other purchases.

Demand Curve

A graph showing the relationship between quantity sold and price.

Price Elasticity of Demand

Percentage change in quantity demanded relative to percentage change in price.

Total Revenue (TR)

Total money received from the sale of a product.

Total Cost (TC)

Total expense incurred by a firm in producing and marketing a product.

Break-Even Analysis

Analyzing the relationship between total revenue and total cost to determine profitability.

Pricing Objectives

Specifications of the role of price in an organization's strategies.

Pricing Constraints

Factors that limit the range of prices a firm may set.

Customer Experience

The total interactions a customer has with a company’s website.

Customization

Ability of a site to modify for individual customers.

Communication

Dialogue between site and consumer.

Interactivity

Two-way communication where buyers control the information received from sellers.

Personalization

Generating content tailored to an individual’s specific needs and preferences.

Choiceboard

An interactive system allowing customers to design their own products and services.

Behavioral Targeting

Using cookies to direct online advertising to targeted users.

Dynamic Pricing

Changing prices for products and services in real time in response to conditions.

Cookies

Computer files downloaded onto a shopper's device to track online behavior.

Social Commerce

Use of social networks for browsing and buying products.

Subscription Commerce

Payment of a fee for recurring delivery of products and services.

Cross-Channel Consumer

A consumer who shops online but buys offline or vice versa.

Showrooming

Examining products in a store and then buying them online for a cheaper price.

Webrooming

Examining products online and then buying them in a store.

Marketing Attribution

Techniques used to credit or value a particular consumer touchpoint.

Four I's of Services

Elements that distinguish services from goods: intangibility, inconsistency, inseparability, inventory.

Idle Production Capacity

When a service provider is available but there is no demand.

Product Item

A specific product with a unique brand, size, or price.

Product Line

A group of closely related product or service items.

Product Mix

All of the product lines offered by an organization.

Protocol

A statement identifying the target market and consumer needs for new product development.

Open Innovation

Using external and internal ideas and collaboration in product development.

New-Product Development Process

Seven stages an organization goes through to identify opportunities for new products.

Idea Generation

Developing a pool of concepts for new products from previous stages.

Screening and Evaluation

Evaluating new-product ideas to eliminate those not worth pursuing.

Business Analysis

Specifying product features and marketing strategies for bringing it to market.

Development

Turning ideas into prototypes for testing.

Market Testing

Exposing products to consumers under realistic purchase conditions.

Commercialization

Positioning and launching a new product in full-scale production and sales.

Consumer Products

Products purchased by the ultimate consumer.

Convenience Products

Frequently purchased items with minimal shopping effort.

Shopping Products

Items for which consumers compare alternatives based on price and quality.

Specialty Products

Items requiring special effort to search for and buy.

Unsought Products

Items consumers do not know about or initially want.

Business Products

Products organizations buy to assist in providing other products for resale.

Product Class

The entire product category or industry.

Product Form

Variations of a product within the same product class.

Product Modification

Altering a product’s characteristics to increase its value.

Market Modification

Strategies to find new customers or increase usage among existing ones.

Trading Up

Adding value to a product through additional features or higher-quality materials.

Trading Down

Reducing a product's features, quality, or price.

Branding

Using names, symbols, or designs to identify products and distinguish them from competitors.

Brand Name

A word or device used to distinguish a seller’s products or services.

Brand Personality

Human characteristics associated with a brand name.

Brand Equity

The added value a brand name gives to a product beyond functional benefits.

Brand Purpose

The reason a brand exists and its role in consumers' lives.

Brand Licensing

Agreement allowing use of brand names or trademarks by another company.

Multiproduct Branding

Using one name for all products in a product class.

Multibranding

Giving each product a distinct name for different market segments.

Private Branding

Manufacturer-produced products sold under a wholesaler or retailer's brand name.

Mixed Branding

Marketing products under both a firm's name and that of a reseller.

Packaging

Any container in which a product is offered for sale.

Label

Identifies the product or brand and provides information on contents and usage.

Seven Ps of Services Marketing

Expanded marketing mix concept that includes people, physical environment, and process.

Off-Peak Pricing

Charging different prices at different times to reflect demand variations.

Capacity Management

Integrating service components with efforts to influence consumer demand.

Introduction Stage

The stage in the product life cycle to stimulate trial and establish primary demand.

Growth Stage

Stage characterized by rapid sales growth and increasing competition.

Maturity Stage

Stage where industry sales slow and profit margins decline.

Decline Stage

Sales begin to drop and price reductions often occur.

Diffusion of Innovations

The process by which new ideas and products spread.

Organizational Inertia

Resistance to change within an organization, impacting innovation efforts.

Customer Experience Management (CEM)

Managing a customer's overall experience with a product or brand.

Crowdsourcing

Obtaining ideas or services from a large group of people, often via the Internet.

Concept Test

A test used to evaluate a new product by gathering consumer feedback on concepts.

Prototyping

Creating a preliminary model of a product to test concepts.

Financial Projections

Forecasting financial outcomes based on business analysis.

Simulated Test Markets

Market tests that replicate full-scale test markets in controlled conditions.

Launch Strategy

Plans for positioning and promoting a new product at market introduction.

Innovation

The process of translating an idea or invention into a good or service that creates value.

Consumer Preferences

The subjective taste preferences of a consumer for certain products or services.