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Chapter 17 Vocab

Terms in this set (20)

price elasticity of demand
the sensitivity of customers to price changes in terms of the quantities they will buy.
horizontal price fixing
an agreement among manufacturers, among wholesalers, or among retailers to set prices
vertical price fixing
when manufacturers or wholesalers seek to control the retail prices of their goods and services
Robinson-Patman Act
Bars manufacturers and wholesalers from discriminating in price or purchase terms in selling to individual retailers if these retailers are purchasing products of "like quality" and the effect of such discrimination is to injure competition.
Minimum Price Laws
prevent retailers from selling certain items for less than their cost plus a fixed percentage to cover overhead
predatory pricing
large retailers seek to reduce competition by selling goods and services at very low prices
loss leader
retailers price selected items below cost to lure more customer traffic to their stores
unit pricing
whereby some retailers must express both the total price of an item and its price per unit of measure
item price removal
whereby prices are marked only on shelves or signs and not on individual items
Bait and Switch Advertising
An illegal practice that lures consumers into a store who are in the market for an item seen at one price; the merchant then claims the product is not available at the price but another model can be purchased at a high price
gray market goods
Brand-name products bought in foreign markets or goods transshipped from other retailers. They are often sold at low prices by unauthorized dealers.
market penetration pricing
retailer seeks large revenues by setting low prices and selling many units
Market-skimming pricing
a firm sets premium prices and attracts customers less concerned with price than service, assortment, and prestige
Demand orientated pricing
a retailer sets prices based on consumer desires
cost-orientated pricing
a retailer sets a price floor.
Competition-Oriented Pricing
A pricing method in which a seller uses prices of competing products as a benchmark instead of considering own costs or the customer demand
price-quality association
Concept stating that many consumers feel high prices connote high quality and low prices connote low quality.
prestige pricing
which assumes that consumers will not buy goods and services at prices deemed too low
markup pricing
a retailer sets prices by adding per-unit merchandise costs, retail operating expenses, and desired profit.
mark up
the difference between merchandise cost and selling price
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