MGMT 105 Final

Market Share

percentage of a market accounted for by a specific firm, product lines, or brands

Competitive effect pricing, market-based pricing

pricing a product based on the competition’s pricing

Prestige products

products that have a high price and that appeal to status conscious consumers

Price elasticity of demand

percentage change in unit sales that results from a percentage change in price

Elastic Demand

demand in which changes in price have large effects on the amount demanded

Inelastic Demand

demand in which changes in price have little or no effect on the amount demanded

Cross-elasticity of Demand

when changes in the price of one product affect the demand for another item

Break-even analysis

method for determining the number of units that a firm must produce and sell at a given price to cover all its costs

Break-even point

point at which the total revenue and total costs are equal and above which the company makes a profit, below that point the firm will suffer a loss

Contribution per Unit

difference between the price the firm charges for a product and the variable costs

Markup

amount added to the cost of a product to create the price at which a channel member will sell the product

Gross Margin

markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profit

Retailer Margin

margin added to the cost of a product by a retailer

Wholesaler Margin

amount added to the cost of a product by a wholesaler

List Price

price that the manufacturer sets as the appropriate price for the end consumer to pay

Manufacturer’s suggested retail price (MSRP)

price that the manufacturer sets as the appropriate price for the end consumer to pay

Sharing Economy

consumer activity where consumers share goods and services that is facilitated by an online platform

Shopping for Control

consumers, facing a world with terrorism and political unrest, value products and services that provide some degree of control, such as smart home technology or gated communities

Cost-Plus Pricing

method of setting prices in which the seller totals all of the costs for the product and then adds an amount to arrive at the selling price

Keystoning

retail pricing pricing strategy in which the retailer doubles the cost of the item to determine the price

Demand-based Pricing

price-setting method based on estimates of demand at different prices

Congestion Pricing

pricing strategy of charging a high fee for operating cars during peak traffic time to reduce congestion

Target Costing

process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed, product is manufactured only if the firm can control costs to meet the required price

Yield Management Pricing

practice of charging different prices to different customers to manage capacity while maximizing revenues

Price Leadership

pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or similar prices

Value pricing, everyday low pricing (EDLP)

pricing strategy in which a firm sets prices that provide ultimate value to customers

High/low pricing, promo pricing

retail pricing strategy in which the retailer prices merchandise at list price but runs frequent, often weekly, promotions that heavily discount some products

Skimming Price

very high, premium price that a firm charges for its new, highly desirable product

Penetration Pricing

pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it

Trial Pricing

pricing a new product low for a limited period of time to lower the risk for a customer

Price Segmentation

practice of charging different prices to different market segments for the same product

Peak Load Pricing

pricing plan that sets prices higher during periods with higher demand

Surge Pricing

pricing plan that raises prices of a product as demand goes up and lowers it as demand slides

Bottom-of-the-Pyramid Pricing

innovative pricing strategy in which brands that wish to get a foothold in bottom-of-the-pyramid countries appeal to consumers with the lowest incomes

Two-Part Pricing

pricing that requires two separate types of payments to purchase the product

Payment Price

pricing tactic that breaks up the total price into smaller amounts payable over time

Subscription Pricing

pricing tactic where customers pay on a periodic basis, normally monthly or yearly, for access to a product

Decoy Pricing

pricing strategy where a seller offers at least three similar products; two have comparable but more expensive prices and one of these two is less attractive to buyers, thus causing more buyers to buy the higher priced, more attractive item

Price Bundling

selling two or more goods or services as a single package for one price

Captive Price

pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high margin item essential to the operation of the first item

FOB factory pricing, FOB origin pricing

pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer

FOB Delivered Pricing

pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer

Uniform Delivered Pricing

pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location

Freight Absorption Pricing

pricing tactics in which the seller absorbs the total cost of transportation

Trade Discounts

discounts off list price of products to members of the channel of distribution who perform various marketing functions

Quantity Discounts

pricing tactic of charging reduced prices for purchases of large quantities of a product

Cash Discounts

discount offered to a customer to entice them to pay their bill quickly

Seasonal Discounts

price reductions offered only during certain times of the year

Dynamic Pricing

pricing strategy in which the price can easily be adjusted to meet changes in the marketplace

Online Auctions

e-commerce that allows shoppers to purchase products through online bidding

Freemium Pricing

business strategy in which a product in its most basic version is provided free of charge but the company charges money for upgraded versions of the product with more features, greater functionality, or greater capacity

Internet Price Discrimination

internet pricing strategy that charges different prices to different buyers for the same product based on order size or geographic location

Cryptocurrency

digital currency that uses cryptography for security

Bitcoin

most popular and fastest-growing cryptocurrency

Digital Wallet

financial account used to store funds, make transactions, and track payments

Mobile Wallet

smartphone app that stores credit card and other information in order to make purchases/payments

Buy-now-pay-later (BNPL)

services that allow consumers to get a product now and pay for it over three or four months

Save-now-buy-later (SNBL)

payment process whereby payments are automatically drafted from a customer’s bank account; when the agreed upon amount is saved, the customer can order the item

Collaborative savings and consumption

savings plan where members are placed into small groups and make monthly payments; one member is selected randomly every 30 days to withdraw the entire monthly contributions

Peer-to-peer (P2P) lending, social lending

allows individuals to borrow money from other individuals giving the lender higher rates and the borrower lower rates than banks

Rent-to-own

buyer rents an item and at a set end of the rental period, the buyer owns the merchandise

Cashless Society

economic state where financial transactions are executed through the transfer of digital information - usually in the form of a credit card, debit card, mobile wallet, or digital currency such as bitcoin - rather than with banknotes

Internal Reference Price

set price or a price range in consumers’ minds that they refer to in evaluating a product’s price

Price Lining

practice of setting a limited number of different specific prices, called price points, for items in a product line

Prestige pricing, premium pricing

pricing strategy used by luxury goods marketers in which they keep the price artificially high to maintain a favorable image of the product

Bait-and-Switch

illegal marketing practice in which an advertised price special is used as bait to get customers into the store with the intention of switching them to a higher priced item

Loss-leader

pricing policy of setting prices very low or even below cost to attract customers into a store

Unfair Sales Acts

state laws that prohibit suppliers from selling products below cost to protect small businesses from larger competitors

Price Gouging

illegal act in which a seller seeks to take advantage of an emergency or extreme need to charge exorbitant prices for items

Price-Fixing

collaboration of two or more firms in setting prices, usually to keep prices high

Predatory Pricing

illegal pricing strategy in which a company sets a very low price for the purpose of driving competitors out of business

Integrated Marketing Communication (IMC)

strategic business process that marketers use to plan, develop, execute, and evaluate coordinated, measurable, persuasive brand communication programs over time to targeted audiences

Multichannel promotion strategy

marketing communication strategy where marketers combine traditional advertising, sales promotion, and public relations activities with online buzz-building activities

Communication process

process whereby meaning is transferred from a source to a receiver

Source

organization or individual that sends a message

Encoding

process of translating an idea into a form of communication that will convey meaning

Message

communication in physical form that goes from a sender to a receiver

Medium

communication vehicle through which a message is transmitted to a target audience

Receiver

organization or individual that intercepts and interprets the message

Decoding

process by which a receiver assigns meaning to the message

Noise

anything that interferes with effective communication

Feedback

receivers’ reactions to the message

Outbound marketing

messages that come from the organization and are intended for those who have agreed to receive them

Inbound marketing

messages that come to the organization from others outside

Ethical bribe

fancy term for an opt-in incentive to join an email mailing list

Promotion Mix

communication elements that the marketer controls

Mass Communication

relates to TV, radio, magazines, and newspapers

Hierarchy of Effects

series of steps prospective customers move through, from initial awareness of a product to brand loyalty

Top-down budgeting techniques

allocation of the promotion budget based on management’s determination of the total amount to be devoted to marketing communication

Percentage of sales method

method for promotion budgeting that is based on a certain percentage of either last year’s sales or estimates of the present year’s sales

Competitive parity method

promotion budgeting method in which an organization matches whatever competitors are spending

Bottom-up budgeting techniques

allocation of the promotion budget based on identifying promotion goals and allocating enough money to accomplish them

Objective-task method

promotion budgeting method in which an organization first defines the specific communication goals it hopes to achieve and then tries to calculate what kind of promotion efforts it will take to meet these goals

Push strategy

company tries to move its products through the channel by convincing channel members to offer them

Pull strategy

company tries to move its products through the channel by building desire for the products among consumers, thus convincing retailers to respond to this demand by stocking these items

Advertising

nonpersonal communication from an identified sponsor using the mass media

TV Everywhere, authenticated streaming

use of an internet-enabled device, like a tablet or smartphone, to stream content from a cable or satellite provider

Product advertising

advertising messages that focus on a specific good or service

Institutional advertising

advertising messages that promote the activities, personality, or point of view of an organization or company

Corporate advertising

advertising that promotes the company as a whole instead of a firm’s individual products