Title: 12 Key Terms
Course: Principles of Marketing > Section: Chapter 12

Key Terms

artificial time constraints

pricing strategy that creates a sense of urgency in buyers’ minds

break-even pricing

pricing strategy in which marketers choose a price that will cover all the costs of manufacturing

bundle pricing

pricing strategy that promotes purchasing multiple items at once; used to prod customers to purchase (and spend) more than they may have otherwise

competition-based objective

product pricing based on the prices of a company’s competitors

consumer confidence

an economic indicator that measures the degree of optimism that consumers have regarding the overall state of the country’s economy and their own financial situations

cost-based objective

product pricing based on the costs of doing business

cross-elasticity of demand

the change in price of one good or service as a similar good or service’s price changes

customer value–based objective

product pricing based on a company’s understanding of the value-added benefits of a product

customer-driven objective

product pricing based on what a customer is willing to pay for a product or service

deceptive price advertising

an unethical pricing practice in which the advertised price of a product is misleading to consumers

demand

a buyer’s ability and willingness to purchase a specific product or service

demand curve

a graph that illustrates the relationship between demand and price

demand elasticity

measure of the change in the quantity demanded in relation to the change in its price

discretionary income

a household’s money that is left over after all taxes and necessities are paid

economy pricing

setting a price much lower than competitors to sell high volumes of a product

fixed costs

costs of doing business that do not change based on number of units produced

income effect

the perception buyers have of how price changes will affect their income

inflation

an economic measure of the rate of rising prices of goods and services in an economy

market share–oriented objective

setting prices at, below, or above competitors in an effort to increase market share

monopoly gouging

when a seller increases the prices of goods and services that are not considered fair or competitive

odd-even pricing

psychological pricing strategy that uses prices that end with odd or even numbers to attract customers

penetration pricing

new product or service strategy that sets the lowest price possible in order to reach the majority of the market in the introduction stage

predatory pricing

when a company prices goods or services so low that other companies cannot compete

prestige pricing

a strategy marketers use to set high prices knowing that demand will increase with higher prices because the higher price increases the perceived value of the product

price

the exchange of something of value between a buyer and seller

price anchoring

a frame of reference for a buyer to set an expectation of a price

price appearance

the way in which a customer perceives a price based on how it is visually represented

price discrimination

selling goods and services at different prices to different customers

price fixing

two or more companies agreeing to set certain prices in the market

price gouging

when companies take advantage of a situation, typically an emergency or natural disaster, and charge exceptionally high prices for products or services

price skimming

pricing strategy in which a company initially sets a high price for a product or service and lowers it over time as new segments of the market are reached

product line pricing

setting a higher price for some product lines and lower price points for others in order to capture various target markets

profit

the financial gain of a company

sales-oriented objective

setting prices based on the goal of increasing the volume of sales

substitutes

products and services that are similar to the one being offered

target return objective

setting prices so they return a specific profit during a given period of time

total costs

total expenses of doing business

total revenue

the money generated from normal business operations

unemployment rate

measure of the number of people not employed in an economy during a given period of time

variable costs

costs that vary based on the number of units produced