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16 terms

Ch 20 - Price

STUDY
PLAY
price competition
advantage:
flexibility (can be adjusted)
disadvantage:
competitors have this flexibility too! can spark P war and weaken co.
nonprice competition
focuses on features, service, quality, promotion, etc. co must have strong brand
advantage:
builds strong customer loyalty
marginal cost
extra cost a firm incurs when it produces 1 more unit of a product
marginal revenue
change in total rev when firm sells another unit of a product
internal reference point
P developed in buyer's mind through past experience
external reference point
comparison P made by retailer
value-conscious
care about P and quality
price-conscious
just care about low P
prestige-sensitive
buy products that signify status
cumulative discount
(B2B)
quantity discount aggregated over time
allowance
(B2B)
concession in P to ACHIEVE a desired goal
F.O.B. factory
(B2B)
P is the P of the merchandise at the factory.
BUYER pays shipping
F.O.B. destination
(B2B)
PRODUCER pays shipping
base-point pricing
(B2B)
geo P policy that includes the P at factory plus freight charges from base point nearest the buyer
freight absorption pricing
(B2B)
seller absorbs all or part of actual freight costs for a PARTICULAR customer
transfer pricing
when 1 unit in a co sells to another unit