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price market segment becomes saturated and sales begin to slow down, the firm generally lowers the price to capture (or skim) the next most price sensitive segmentreference price: The price against which buyers compare the actual selling price of the product and that facilitates their evaluation processsales orientation: A company objective based on the belief that increasing sales will help the firm more than will increasing profitsstatus quo pricing: A competitor-oriented strategy in which a firm changes prices only to meet those of competitionsubstitute 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 quantitysubstitution effect: Refers to consumers' ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brandtarget profit pricing:A pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unittarget return pricing: A pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of salestotal cost:The sum of the variableand fixed costsvariable costs:Those costs, primarily labor and materials, that vary with production volumevertical price fixing:Occurs when parties at different levels of the same marketing channel (e.g., manufacturers and retailers) collude to control the prices passed on to consumers5 C’s of Pricing: Costs, Competition, Company Objectives, Customers, Channel MembersCh 15 Supply Chain and Channel Managementadministered vertical marketing system: A supply chain system in which there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship
advanced shipping notice (ASN):An electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment.coercive power:Threatening or punishing the other channel member for not undertaking certain tasks. Delaying payment for late delivery would be an examplecontractual vertical marketing system: A system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and coordination and to reduce conflictcorporate vertical marketing system:A system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studiosdirect marketing channel:The manufacturer sells directly to the buyerdistribution center: