CH 6 | 469

consideration/evoked parity
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Terms in this set (21)
consideration/evoked parity
set of brands a customer views as being approximately equal
cost-plus pricing
setting the price based on both the variable and fixed costs associated with producing the product and a desired contribution margin
deceptive pricing
a pricing practice that misleads consumers
incremental approach
-pricing a new product based on the incremental costs of producing the new product over the costs of producing a similar existing product
-does not account for consumer benefit and value, can lead to lost revenue
markup
difference between the selling price of an item and what it costs to produce that item
penetration pricing
-setting the price low to discourage competitors from entering the market and to build primary demand
-price floor
-stimulate demand quickly, build market share, discourage new entrants
predatory pricing
pricing designed to eliminate competition
price discrimination
selling merchandise to different buyers at different prices
price elasticity of demand
change in demand relative to a change in price
price fixing
an agreement between businesses to charge the same price for a good or service
price perceptual mapa visual tool used to examine brand image or quality and brand market position relative to the competitionpricing strategybasic direction the company's marketing and management teams take when setting pricesreference priceprice customers initially identify with a new productskimming price strategy-setting the price high in order to recover research and development costs as quickly as possible -price ceiling -product difficult to copy, level of prestige, copyrightcost oriented approaches to setting price-cost-plus pricing -markup pricingprice elasticity-change in demand/change in price -unitary=1 -inelastic=below 1 -elastic=greater than 1when is price elasticity best usedinelastic demand is best because demand changes little compared to pricesale price strategies-skimming -penetration -incrementalprice discounts-consumers (sale price, seasonal, quantity, bundle) -business (sale price, volume discount, early-payment discounts) :sale price (loss leader, promotional, introductory)weber's lawfor a price to be noticed it must be greater than 10% before it generates a responselegal and ethical pricing-price discrimination -price fixing -deceptive pricing -predatory pricing