question
What is the definition of price?
answer
The amount of money charged for a product or service
question
What is the customer value-based pricing strategy?
answer
Choosing a price based on the perceptions of the buyers, rather than based on the sellers' costs
question
What is the good value pricing strategy?
answer
- Offering the right combination of quality and service at a good price
- Includes EDLP and high-low pricing
- Includes EDLP and high-low pricing
question
What is EDLP pricing?
answer
Everyday Low Pricing; charging a constant low price everyday with little or no discount
question
What is High-Low pricing?
answer
Charging higher prices but offering more promotions on certain items
question
What is the value-added pricing strategy?
answer
Attaching value-added features and services to differentiate one company's offering from another, and charging higher prices, rather than cutting prices to match its competitors
question
What is the cost-based pricing strategy?
answer
Setting prices based on the costs of producing and selling the product
question
What are fixed costs?
answer
They are costs that do not vary with production or sales level; price is constant no matter what
question
What are variable costs?
answer
They are costs that vary directly with the level of production
question
What are total costs?
answer
The sum of fixed and variable costs
question
What is cost-plus (markup) pricing?
answer
Adding a standard markup to the cost of the product
question
What is break-even (target return) pricing?
answer
Setting the price at a point to break even on the cost of making and marketing a product or setting the price to make a target return
question
What is competition-based pricing?
answer
Setting prices based on the strategies of competitors, prices, costs, and overall market offerings
question
What is pure competition?
answer
No buyer or seller really affects the market/pricing
question
What is monopolistic competition?
answer
- Many buyers and sellers trading over a range of prices, rather than one single market price
- In this market, companies will use branding or advertising to set their offering apart from the others
- In this market, companies will use branding or advertising to set their offering apart from the others
question
What is oligopolistic competition?
answer
- When there are a few large sellers who are alert to each other
- Pricing becomes a major tool here
- Pricing becomes a major tool here
question
What is a pure monopoly?
answer
When there is one seller (ex. The Post Office)
question
What is a demand curve?
answer
A curve that shows the number of units a market will buy in a given time period
question
What is price elasticity?
answer
A measure of how sensitive demand is to changes in price
question
What is significant about inelastic?
answer
Price does not change
question
What is significant about elastic?
answer
Price changes
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