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Flashcards in Pricing Concepts Deck (29)
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1
Q

Price

A

That which is given up in an exchange to acquire a good or service

2
Q

Revenue

A

The price charged to customers multiplied by the number of units sold

3
Q

Profit

A

Revenue minus expenses

4
Q

Return On Investment (ROI)

A

Net profit after taxes divided by total assets

5
Q

Market Share

A

A company’s product sales as a percentage of total sales for that industry

6
Q

Status Quo Pricing

A

A pricing objective that maintains existing prices or meets the competition’s prices

7
Q

Demand

A

The quantity of a product that will be sold in the market at various prices for a specified period

8
Q

Supply

A

The quantity of a product that will be offered to the market by a supplier at various prices for a specified period

9
Q

Price Equilibrium

A

The price at which demand and supply are equal

10
Q

Elasticity Of Demand

A

Consumers’ responsiveness or sensitivity to changes in price

11
Q

Elastic Demand

A

A situation in which consumer demand is sensitive to changes in price

12
Q

Inelastic Demand

A

A situation in which an increase or a decrease in price will not significantly affect demand for the product

13
Q

Unitary Elasticity

A

A situation in which total revenue remains the same when prices change

14
Q

Dynamic Pricing

A

A strategy whereby prices are adjusted over time to maximize a company’s revenues

15
Q

Yield Management System (YMS)

A

A technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity by discounting early purchases, limiting early sales at these discounted prices, and overbooking capacity

16
Q

Variable Cost

A

A cost that varies with changes in the level of output

17
Q

Fixed Cost

A

A cost that does not change as output is increased or decreased

18
Q

Average Variable Cost (AVC)

A

Total variable costs divided by quantity of output

19
Q

Average Total Cost (ATC)

A

Total costs divided by quantity of output

20
Q

Average Fixed Cost (AFC)

A

Total fixed costs divided by quantity of output

21
Q

Marginal Cost (MC)

A

The change in total costs associated with a one-unit change in output

22
Q

Markup Pricing

A

The cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for

23
Q

Keystoning

A

The practice of marking up prices by 100 percent, or doubling the cost

24
Q

Profit Maximization

A

A method of setting prices that occurs when marginal revenue equals marginal cost

25
Q

Marginal Revenue (MR)

A

The extra revenue associated with selling an extra unit of output or the change in total revenue with a one-unit change in output

26
Q

Break-Even Analysis

A

A method of determining what sales volume must be reached before total revenue equals total costs

27
Q

Selling Against The Brand

A

Stocking well-known branded items at high prices in order to sell store brands at discounted prices

28
Q

Extranet

A

A private electronic network that links a company with its suppliers and customers

29
Q

Prestige Pricing

A

Charging a higher price to help promote a high-quality image