Gizem Atav COB300D Exam 2 Vocab
cost-based pricing methods - correct answer ✔✔determine the final price to charge by starting with the
cost
competition-based pricing method - correct answer ✔✔set their prices to reflect the way they want
consumers to interpret their own prices, relative to competitors' offerings
value-based pricing methods - correct answer ✔✔approaches to setting prices that focus on the overall
value of the product offering as perceived by the consumer
improvement value - correct answer ✔✔represents an estimate of how much more (or less) consumers
are willing to pay for a product relative to other comparable products
cost-of-ownership method - correct answer ✔✔consumers may be willing to spend more initially if, over
the lifetime, the product will eventually cost less to own
pricing strategy - correct answer ✔✔A long-term approach to setting prices broadly in an integrative
effort based on the five C's (company objectives, costs, customers, competition, channel members)
everyday low pricing - correct answer ✔✔companies stress the continuity of their retail prices at a level
somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may
offer
high-low pricing strategy - correct answer ✔✔relies on the promotion of sales, during which prices are
temporarily reduced to encourage purchases
penetration pricing - correct answer ✔✔setting a low initial price on a new product to appeal
immediately to the mass market
,experience curve effect - correct answer ✔✔refers to the drop in unit cost as the accumulated volume
sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in
the price
price skimming - correct answer ✔✔a pricing policy whereby a firm charges a high introductory price,
often coupled with heavy promotion, followed by a gradual reduction of price to capture more price-
sensitive segments
pricing tactics - correct answer ✔✔Short-term methods, in contrast to long-term pricing strategies, used
to focus on company objectives, costs, customers, competition, or channel members; can be responses
to competitive threats (e.g., lowering price temporarily to meet a competitor's price reduction) or
broadly accepted methods of calculating a final price for the customer that is short term in nature.
Support pricing strategies
markdowns - correct answer ✔✔reductions retailers take on the initial selling price of the product or
service; an integral component to high-lower pricing strategy
seasonal discounts - correct answer ✔✔discounts that stimulate demand during off-peak seasons
coupons - correct answer ✔✔offer a discount on the price of specific items when they're purchased.
Questionable impact profitability--may steal sales from a future period or alienate customers because of
confusing/annoying conditions
rebate - correct answer ✔✔a discount offered in the form of a partial refund that is issued to the
customer several weeks after the purchase. Effective because 90% of customers never redeem them,
they are easy to roll out or shut off quickly, and they create a database of customers
price bundling - correct answer ✔✔practice of selling more than one product for a single, lower price
leader pricing - correct answer ✔✔a price tactic in which a product is sold near or even below cost in the
hope that shoppers will buy other items once they are in the store
, price lining - correct answer ✔✔establishing a price floor and a price ceiling for an entire line of similar
products and then setting a few other price points in between to represent distinct differences in quality.
Think of the shirt example-- standard dress shirt, Egyptian cotton dress shirt, luxury dress shirt
cash discount - correct answer ✔✔A B2B pricing tactic. Terms are expressed like "3/10, n30" ==> 3%
discount if paid within 10 days; full payment is due within 30 days
advertising allowance - correct answer ✔✔a type of B2B allowance in which a business offers reduced
price to channel members who feature the business in their advertising and promotional efforts.
slotting allowances - correct answer ✔✔fees that manufacturers pay to retailers to feature their
products--better location/more shelf space/more POP promotion leads to higher fees
quantity discount - correct answer ✔✔B2B pricing tactic that offers a reduced price according to the
amount purchased.
size discount - correct answer ✔✔A B2C pricing tactic. A type of quantity discount that offers reduced
price according to the size of the product (think cereal--bigger boxes are cheaper per oz)
cumulative quantity discount - correct answer ✔✔uses amount purchased over a specified time period
(oftentimes over a quarter) to determine the discount
noncumulative quantity discount - correct answer ✔✔a discount based on the amount purchased in a
single order
uniform delivered pricing - correct answer ✔✔a pricing tactic used for shipping in which all customers
are charged the same shipping price regardless of location
zone pricing - correct answer ✔✔pricing tactic used for shipping which divides the company's service
area into geographic segments. Customers are charged different shipping prices depending on which
zone they are located in (further away ==> higher shipping cost)
cost-based pricing methods - correct answer ✔✔determine the final price to charge by starting with the
cost
competition-based pricing method - correct answer ✔✔set their prices to reflect the way they want
consumers to interpret their own prices, relative to competitors' offerings
value-based pricing methods - correct answer ✔✔approaches to setting prices that focus on the overall
value of the product offering as perceived by the consumer
improvement value - correct answer ✔✔represents an estimate of how much more (or less) consumers
are willing to pay for a product relative to other comparable products
cost-of-ownership method - correct answer ✔✔consumers may be willing to spend more initially if, over
the lifetime, the product will eventually cost less to own
pricing strategy - correct answer ✔✔A long-term approach to setting prices broadly in an integrative
effort based on the five C's (company objectives, costs, customers, competition, channel members)
everyday low pricing - correct answer ✔✔companies stress the continuity of their retail prices at a level
somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may
offer
high-low pricing strategy - correct answer ✔✔relies on the promotion of sales, during which prices are
temporarily reduced to encourage purchases
penetration pricing - correct answer ✔✔setting a low initial price on a new product to appeal
immediately to the mass market
,experience curve effect - correct answer ✔✔refers to the drop in unit cost as the accumulated volume
sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in
the price
price skimming - correct answer ✔✔a pricing policy whereby a firm charges a high introductory price,
often coupled with heavy promotion, followed by a gradual reduction of price to capture more price-
sensitive segments
pricing tactics - correct answer ✔✔Short-term methods, in contrast to long-term pricing strategies, used
to focus on company objectives, costs, customers, competition, or channel members; can be responses
to competitive threats (e.g., lowering price temporarily to meet a competitor's price reduction) or
broadly accepted methods of calculating a final price for the customer that is short term in nature.
Support pricing strategies
markdowns - correct answer ✔✔reductions retailers take on the initial selling price of the product or
service; an integral component to high-lower pricing strategy
seasonal discounts - correct answer ✔✔discounts that stimulate demand during off-peak seasons
coupons - correct answer ✔✔offer a discount on the price of specific items when they're purchased.
Questionable impact profitability--may steal sales from a future period or alienate customers because of
confusing/annoying conditions
rebate - correct answer ✔✔a discount offered in the form of a partial refund that is issued to the
customer several weeks after the purchase. Effective because 90% of customers never redeem them,
they are easy to roll out or shut off quickly, and they create a database of customers
price bundling - correct answer ✔✔practice of selling more than one product for a single, lower price
leader pricing - correct answer ✔✔a price tactic in which a product is sold near or even below cost in the
hope that shoppers will buy other items once they are in the store
, price lining - correct answer ✔✔establishing a price floor and a price ceiling for an entire line of similar
products and then setting a few other price points in between to represent distinct differences in quality.
Think of the shirt example-- standard dress shirt, Egyptian cotton dress shirt, luxury dress shirt
cash discount - correct answer ✔✔A B2B pricing tactic. Terms are expressed like "3/10, n30" ==> 3%
discount if paid within 10 days; full payment is due within 30 days
advertising allowance - correct answer ✔✔a type of B2B allowance in which a business offers reduced
price to channel members who feature the business in their advertising and promotional efforts.
slotting allowances - correct answer ✔✔fees that manufacturers pay to retailers to feature their
products--better location/more shelf space/more POP promotion leads to higher fees
quantity discount - correct answer ✔✔B2B pricing tactic that offers a reduced price according to the
amount purchased.
size discount - correct answer ✔✔A B2C pricing tactic. A type of quantity discount that offers reduced
price according to the size of the product (think cereal--bigger boxes are cheaper per oz)
cumulative quantity discount - correct answer ✔✔uses amount purchased over a specified time period
(oftentimes over a quarter) to determine the discount
noncumulative quantity discount - correct answer ✔✔a discount based on the amount purchased in a
single order
uniform delivered pricing - correct answer ✔✔a pricing tactic used for shipping in which all customers
are charged the same shipping price regardless of location
zone pricing - correct answer ✔✔pricing tactic used for shipping which divides the company's service
area into geographic segments. Customers are charged different shipping prices depending on which
zone they are located in (further away ==> higher shipping cost)
