Marketing ch 15

  1. FOB (free on board) destination
    A pricing arrangement that designates that a product’s title changes at its destination (the place to which it’s transported), and the seller pays the shipping charges.
  2. FOB (free on board) origin
    A pricing arrangement that designates that a product’s title changes at its origin (the place it’s purchased), and the buyer pays the shipping charges.
  3. Robinson-Patman Act
    A U.S. act that limits price discrimination (charging different customers different prices for the same product and quantities of it purchased).
  4. bait and switch
    A pricing tactic a seller uses to lure in, or “bait,” customers with a low-priced product. The seller then attempts to persuade the buyer to purchase higher-priced products, perhaps by telling him or her that the low-priced product is no longer available.
  5. bounce back
    A discount card or coupon purchasers can use on their next shopping visits during set dates.
  6. breakeven point (BEP)
    The amount (in units or dollars) where total revenue equals total costs.
  7. captive pricing
    A strategy firms use to price products when they know customers must buy specific replacement parts, such as razor blades, because there are no alternatives.
  8. cost-plus pricing
    A pricing strategy where a certain amount of profit is added to the total cost of a product in order to determine its price.
  9. demand backward pricing
    Pricing a product based on what customers are willing to pay for it and then creating the offering based on that price.
  10. everyday low pricing
    The practice of charging a low initial price for an offering and maintaining that price throughout the offering’s product life cycle.
  11. fixed costs
    Overhead or costs that remain the same regardless of the level of production or the level of sales.
  12. forward auction
    The process that occurs when a buyer lists what he or she wants to buy and sellers may submit bids.
  13. going-rate pricing
    Pricing whereby purchasers pay the same price for a product regardless of where they buy it or from whom.
  14. leader pricing
    A strategy of offering low prices on one or more items as “lead” items in advertisements to attract customers.
  15. loss leaders
    Products priced below cost; this is illegal in some states.
  16. markdown
    The amount (in dollars or percent) taken off the price.
  17. markup
    A certain amount of money added to the cost of a product to set the final price.
  18. odd-even pricing
    A strategy in which a company prices products a few cents below the next dollar amount or a few dollars (for high-cost products such as automobiles) below the next hundred- or thousand-dollar value.
  19. online auction
    Bidding and negotiating prices online with buyers and sellers on sites such as until an acceptable price is agreed upon.
  20. payment pricing
    A pricing strategy in which customers are allowed to break down product payments into smaller amounts they pay incrementally.
  21. penetration pricing strategy
    A strategy in which an organization offers a low initial price on a product so that it captures as much market share as possible.
  22. predatory pricing
    When companies act in a predatory manner by setting low prices to drive competitors out of business.
  23. prestige pricing
    The practice of pricing a product higher to signal that it is of high quality.
  24. price adjustment
    A change to the listed price of a product.
  25. price bundling
    A strategy of selling different products or services together, typically at a lower price than if each product or service is sold separately.
  26. price discrimination
    The process of charging different customers different prices for the same product and quantities of it purchased.
  27. price elastic
    Consumers are very sensitive to price changes and buy more at low prices and less at high prices.
  28. price elasticity
    The amount of sensitivity to price changes, which affects the demand for a product.
  29. price fixing
    When firms get together and agree to charge the same prices.
  30. price inelastic
    Buyers are not sensitive to price changes and demand is relatively unchanged.
  31. price lining (price levels)
    Pricing a group of similar products (e.g., neckties) at a few different price levels (e.g., $25, $50, and $75).
  32. pricing objectives
    What an organization wants to accomplish with its pricing.
  33. product mix pricing
    Deciding how to price a firm’s products and services that go together, such as power options (locks, windows) on a car.
  34. promotional pricing
    A short-term tactic to get people to purchase a product or more of it.
  35. quantity discounts
    Discounts buyers get for making large purchases.
  36. reciprocal agreements
    Agreements whereby merchants agree to promote one another’s offerings to customers.
  37. reverse auction
    When the buyer lists what he or she wants to buy and also states how much he or she is willing to pay. The reverse auction is finished when at least one firm is willing to accept the buyer’s price.
  38. sealed bid pricing
    The process of offering to buy or sell products at prices designated in sealed bids.
  39. skimming price strategy
    A strategy whereby a company sets a high initial price for a product. The idea is to target buyers who are willing to pay a high price (top of the market) and buy products early.
  40. status quo
    An objective a firm sets to maintain its current prices and/or its competitors’ prices.
  41. total cost
    Fixed costs plus variable costs.
  42. trade allowances
    Discounts an organization gives its channel partners for performing different functions.
  43. two-part pricing
    A pricing strategy in which providers have two different charges for a product, such as the base monthly rate for cell phone coverage and additional charges for extra minutes or texting.
  44. unfair trade laws
    State laws requiring sellers to keep a minimum price level for similar products.
  45. uniform-delivered pricing
    A pricing strategy in which buyers pays the same shipping charges regardless of their locations.
  46. variable costs
    Costs that change with the level of production or service delivery.
Card Set
Marketing ch 15
Key terms