four unique elements that distinguish services from goods: Intangibility, Inconsistancy, Inseparability, and Inventory
a marketing research method that measures the difference between a customer's expectation of a service quality and what actually occurred
idle production capacity
when the service provider is available but there is no demand
treating employees as customers and developing systems and benefits that satisfy their needs
Charging different prices during different times of the day or days of the week to reflect variations in demand for the service
what companies bring to the market ranges from the tangible to the intangible or good-dominant to service-dominant offerings
actions or activities that one person performs for another
Average Revenue (ar)
the average amount of money received for selling one unit of a product, or simply the price of that unit.
a form of trade in which people exchange goods and services without the use of money
A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
A graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold.
break-even point (BEP)
The quantity at which total revenue and total cost are equal.
graph relating quantity sold and price, which shows how many units will be sold at a given price
factors that determine consumers willingness and ability to pay for products and services
fixed cost (FC)
The sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.
A continuing, concise trade-off of incremental costs against incremental revenues.
marginal cost (MC)
the change in total costs associated with a one-unit change in output
marginal revenue (MR)
the extra revenue associated with selling an extra unit of output or the change in total revenue with a one-unit change in output
The money or other considerations (including other products and services) exchanged for the ownership or use of product or service.
price elasticity of demand
the percentage change in quantity demanded divided by the percentage change in price
factors that limit the range of prices a firm may set
specifying the role of price in an organization's marketing and strategic plans
profit = total revenue - total cost; or profit = (unit price x quantity sold) - (fixed cost + variable cost)
total cost (TC)
The total expense incurred by a firm in producing and marketing a product. Total cost is the sum of fixed cost and variable cost.
total revenue (tr)
The total money received from the sale of a product.
unit variable cost (UVC)
Variable cost expressed on a per unit basis.
The ratio of perceived benefits to price; or Value= (perceived benefits / price)
the practice of simultaneously increasing product and service benefits while maintaining or decreasing price
variable cost (VC)
The sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
independent firms or individuals whose principal function is to bring buyers and sellers together to make sales
a channel member (producer, wholesaler, or retailer) that coordinates directs and supports other channel members
arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals
consists of agreements and procedures among channel members for ordering and physically distributing a producer's products through the channel to the ultimate consumer
direct marketing channels
allowing consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson
Channel conflict that arises when a channel member bypasses another member and sells or buys products direct
an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product
electronic marketing channels
employing the internet to make goods and services available for consumption or use by consumers or business buyers
a level of distribution density whereby only one retailer in a specific geographical area carries the firm's products
A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.
an intermediary that performs a variety of marketing channel functions, including selling, stocking, delivering a full product assortment, and financing
a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible
agents who work for several producers and carry noncompetitive complementary merchandise in an exclusive territory. Also called manufacturer's representatives
Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users
independently owned firms that take title to the goods they handle
the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online
a level of distribution density whereby a firm selects a few retail outlets in a specific geographical area to carry its products
represent a single producer and are responsible for the entire marketing function of that producer, agents who represent a single producer and are responsible for the entire marketing function of that producer
strategic channel alliances
a practice whereby one firm's marketing channel is used to sell another firm's products
vertical marketing systems
Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
Above-, at-, or below-market pricing
setting a market price for a product or product class based on a subjective feel for the competitors' price or market as the benchmark
selecting one or more geographical locations (basing point) from which the list price for products plus freight expenses are charged to the buyer.
the marketing of two or more products in a single package price
summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
setting a price that is dictated by tradition a standardized channel of distribution or other competitive factors
everyday low pricing
the practice of replacing promotional allowances with lower manufacturers list prices
experience curve pricing
a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 each time a firm's experience at producing and selling them doubles, resulting in possible rapid price reductions
flexible -price policy
setting different prices for products and services depending on individual buyers and purchase situations. Also called dynamic pricing
FOB origin pricing
"free on board" price the seller quotes that includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is occur (seller's factory or warehouse)
deliberately selling a product below its customary price not to increase sales but to attract customers attention in hopes that they will buy other products as well
setting prices a few dollars or cents under an even number
Setting one price for all buyers of a product or service. Also called fixed pricing.
setting a low initial price on a new product to appeal immediately to the mass market
the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market
sets higher-than-average prices to suggest status and prestige to the consumer
occurs when a business sells the same product to different people at different prices
a conspiracy among firms to set prices for a product
Setting the price of a line of products at a number of different specific pricing points.
successive price cutting by competitors to increase or maintain their unit sales or market share
the setting of prices for all items in a product line to cover the total cost and produce a prfit for the complete line, not necessarily for each item
cash payments or extra amount of "free goods" awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product
reductions in unit costs for a larger order
Setting a high price when introducing a product that has little competition and will appeal to customers who like to be the first to have the latest products.
standard markup pricing
adding a fixed percentage to the cost of all items in a specific product class
consist of (1) estimating the price that ultimate consumers would be willing to pay for a product (2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers and then (3) deliberately adjusting the composition and features of the product to achieve the target price to consumers
target profit pricing
Setting an annual target of a specific dollar volume of profit
target return-on-investment pricing
setting a price to achieve an annual target return-on-investments
target return-on-sales pricing
Setting a price to acheive a profit that is a specified percentage of sales volume
uniform delivered pricing
The price the seller quotes that includes all transportation costs
yield management pricing
The charging of different prices to maximize revenue for a set amount of capacity at any given time.