BUS 360 Test 4.docx - Chapter Fourteen Pricing Concepts for Establishing Value Price The overall sacrifice a consumer is willing to makemoney time

BUS 360 Test 4.docx - Chapter Fourteen Pricing Concepts for...

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Chapter Fourteen: Pricing Concepts for Establishing Value Price: The overall sacrifice a consumer is willing to make—money, time, energy—to acquire a specific product or service Target Return Pricing: Pricing strategies designed to produce a specific return on their investment, usually expressed as a percentage of sales Premium Pricing: A competitor-based pricing method by which the firm deliberately prices a product above the prices set for competing products to capture those consumers who always shop for the best or for whom price does not matter Comparative Parity: firm's strategy of setting prices that are similar to those of major competitors Status Quo Pricing: A competitor-oriented strategy in which a firm changes prices only to meet those of competition Customer Orientation: A company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers’ needs Demand Curve: Shows how many units of a product or service consumers will demand during a specific period at different prices Prestige Products/Services: Those that consumers purchase for status rather than functionality Price Elasticity of Demand: Measures how changes in a price affect the quantity of the product demanded; specifically, the ratio of the percentage change in quantity demanded to the percentage change in price Elastic: Refers to a market for a product or service that is price sensitive; that is, relatively small changes in price will generate fairly large changes in the quantity demanded Inelastic: Refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded Dynamic/Individualized Pricing: Refers to the process of charging different prices for goods or services based on the type of customer, time of the day, week, or even season, and level of demand Income Effect: Refers to the change in the quantity of a product demanded by consumers due to a change in their income Substitution Effect: Refers to consumers’ ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand Cross-Price Elasticity: The percentage change in demand for product A that occurs in response to a percentage change in price of product B Complementary Products : Products whose demand curves are positively related, such that they rise or fall together; a percentage increase in demand for one results in a percentage increase in demand for the other Substitute Products: Products for which changes in demand are negatively related; that is, a percentage increase in the quantity demanded for product A results in a percentage decrease in the quantity demanded for product B.
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  • Spring '08
  • Kimbrough
  • Pricing

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