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price competition

flexibility (can be adjusted)
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
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


care about P and quality


just care about low P


buy products that signify status

cumulative discount

quantity discount aggregated over time


concession in P to ACHIEVE a desired goal

F.O.B. factory

P is the P of the merchandise at the factory.
BUYER pays shipping

F.O.B. destination

PRODUCER pays shipping

base-point pricing

geo P policy that includes the P at factory plus freight charges from base point nearest the buyer

freight absorption pricing

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

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