Marketing Chapter 14
Marketing Chapter 14 MAR 250
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This 4 page Class Notes was uploaded by Melanie Guerrero on Sunday February 28, 2016. The Class Notes belongs to MAR 250 at Pace University taught by Harvey Markowitz in Winter 2016. Since its upload, it has received 41 views. For similar materials see Principles of Marketing (20335) in Marketing at Pace University.
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Date Created: 02/28/16
Marketing Chapter 14 Vocabulary: Above-at, or below-market pricing – setting a market price for a product or product class bared on a subjective feel for the competitor’s price or market price as the benchmark Basing-point pricing – selecting one or more geographical locations (basing point) from which the list price for products plus freight expenses are charged to the buyer Bundle pricing – the marketing or two or more products in a single package price Cost-plus pricing – summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a cost price Customary pricing – setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors Dynamic pricing policy – setting different prices for products and services in real time response to supply and demand conditions Everyday low pricing (EDLP) – the practice of replacing promotional allowances with lower manufacturer list prices Experience curve pricing – based on the learning effect, which hold that the unit cost of many products and service declines by 10% to 30% each time a firm’s experience at producing and selling them doubles Fixed-price policy – setting one price for all buyers of a product or service FOB origin policy – the “free on board” (FOB) price the seller quotes that includes only the cost of loading the product onto the vehicle and specifies the name of the location where the landing is to occur (seller’s factory or warehouse) Loss-leader pricing – deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they will buy other products with large markups as well Odd-even pricing – setting prices a few dollars or cents under an even number Penetration pricing – the exact opposite of skimming pricing Predatory pricing – Prestige pricing – setting a high price so that quality – or status-conscious consumers will be attracted to the product and buy it Price discrimination – the practice of charging different prices to different buyers for products of like grade and quality Price fixing – a conspiracy among firms to set prices for a product Price lining – a firm that is selling no just a specific product but a line of products may price them at a number of different specific pricing points Price War – successive price butting by competitors to increase or maintain their unit sales or market share Product-line pricing – setting of prices for all items in a product line Promotional allowances – cash payments or an extra amount of “free goods” awarded to sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product Quantity discounts – reductions in unit costs for a larger order Skimming pricing – setting the highest initial price that customers who really desire the product are willing to pay Standard markup pricing – adding a fixed percentage to the cost of all items in a specific product class Target pricing – consists of (1) estimating the price that ultimate consumers would be willing to pay for product, (2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers and then (3) deliberately adjusting the composition and features of the product to achieve the target price to consumers 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 profit that is a specified percentage of the sales volume Target return-on-investment pricing – setting a price to achieve an annual target return on investment Uniform delivered pricing – the price the seller quotes that includes all transportation costs Yield management pricing – adding a fixed percentage to the cost of all items in a specific product class I. Step 4: Select an approximate price level A. Demand-oriented pricing approaches 1. Skimming pricing – vocab** 2. Penetration pricing – vocab** 3. Prestige pricing – vocab** 4. Price lining – vocab** 5. Odd-even pricing – vocab** 6. Target pricing – vocab** 7. Bundle pricing – vocab** 8. Yield management pricing – vocab** B. Cost-Orientated pricing approaches 1. Standard markup pricing – vocab** 2. Cost-plus pricing- vocab** 3. Experience curve pricing – vocab** C. Profit-Oriented Pricing Approaches 1. Target profit pricing – vocab** Profit = Total Revenue – Total Cost Profit = (P*Q) – [FC = (UVC * Q)] 2. Target return-on-sales pricing – vocab** Target return on sales = _Target Profit_ Total Revenue = TR – TC TR 3. Target return-on-investment pricing – vocab** B. Competition-orientated pricing approaches 1. Customary pricing – vocab** 2. Above-, At-, or Below-marketing pricing – vocab** 3. Loss-leader pricing – vocab** II. Step 5: Set the List or Quoted Price A. Choose a price policy 1. Fixed-price policy – vocab** 2. Dynamic pricing policy – vocab** B. Consider company, customer, and competitive effects on pricing 1. Company effects a. Product-line pricing – vocab** i. The lowest-priced product and price ii. The highest-priced product and price iii. Price differentials for all other products in the line b. Customer effects i. Pay close attention to factors: customary prices for a variety of consumer products c. Competitive effects i. Price war – vocab** C. Balance Incremental costs and revenues =_____Extra fixed cost_____ Price – Unit variable cost III. Step 6: Make Special adjustments to the list or quoted price A. Discounts 1. Quantity discounts – vocab** 2. Seasonal discounts 3. Trade (functional) discounts a. Reduce based of (1) where they are in the channel and (2) the marketing activities they are expected to perform in the future 4. Cash discounts B. Allowances – reduced from list or quoted prices to buyers for performing some way 1. Trade-in allowances 2. Promotional allowances a. Promotional allowances – vocab** b. Everyday low pricing (EDLP) – vocab** C. Geographical adjustments 1. FOB Origin pricing – vocab** 2. Uniform delivered pricing – vocab** a. Single-zone pricing b. Multiple-zone pricing c. FOB with freight-allowing pricing d. Basing-point pricing – vocab** D. Legal and regulatory aspects or pricing 1. Price fixing – vocab** 2. Price discrimination 3. Deceptive pricing – price deals that mislead consumers 4. Geographical pricing 5. Predatory pricing – vocab**