Ch. 20 Marketing
A basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle.
A pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion.
A pricing policy whereby a firm charges a relatively low price for a product intitally as a way to reach the mass market.
Charging a price identical to or very close to the competition's price.
Status Quo Pricing
Laws that prohibit wholesalers and retailers from selling below cost.
Unfair Trade Practice Acts
An agreement between two or more firms on the price they will charge for a product.
The practice of charging a very low price for a product with the intent of driving competitiors out of business or out of a market.
The general price level at which the company expects to sell the good or service.
A price reduction offered to buyers buying in multiple units or above a specified dollar amount.
A deduction from list price that applies to the buyer's total purchases made during a specific period.
Cumulative Quantity Discount
A deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period.
Noncumulative Quantity Discount
A price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill.
A discount to wholesalers and retailers for performing channel functions.
Functional Discount (Trade Discount)
A price reduction for buying merchandise out of season.
A payment to a dealer for promoting the manufacturer's products.
Promotional Allowance (Trade Allowance)
A cash refund given for the purchase of a product during a specific period.
Setting the price at a level that seems to the customer to be a good price compared to the price of other options.
A price tactic that requires the buyer to absorb the freight costs from the shipping point ("free on board").
FOB Origin Pricing
A price tactic in which the seller pays the actual freight charges and bills every purchaser an identical, flat freight charge.
Uniform Delivered Pricing
A modification of uniform delivered pricing that divides the United States (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone.
A price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer.
Freight Absorption Pricing
A price tactic that charges freight from a given (basing) point, regardless of the city from which the goods are shipped.
A price tactic that offers all goods and services at the same price (or perhaps two or three prices)
A price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities.
Flexible Pricing (Variable Pricing)
The practice of offering a product line with several items at specific price points.
A price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store.
Leader Pricing (Loss-Leader Pricing)
A price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise.
A price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality.
Odd-Even Pricing (Psychological Pricing)
Marketing two or more products in a single package for a special price.
Reducing the bundle of services that comes with the basic product.
A price tactic that charges two separate amounts to consume a single good or service.
An extra fee paid by the consumer for violating the terms of the purchase agreement.
Setting prices for an entire line of products.
Product Line Pricing
Costs that are shared in the manufacturing and marketing of several products in a product line.
A price tactic used for industrial installations and many accessory items in which a firm price is not set until the item is either finished or delivered.
A price tactic in which the final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made.
The use of discounts by salespeople to increase demand for one or more products in a line.
Ch. 20 Marketing