Explain target profit pricing. * a firm may set an annual target of a specific dollar volume of profit. Explain target return-on-sales pricing. * setting a price to achieve a profit that is a specified percentage of the sales volume. Pg. 368Explain target return on investment pricing: * setting a price to achieve an annual target return on investment.Discuss customary pricing. Under what competitive conditions is this pricing method most likely to be used? Customary pricing: setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.Discuss above-market and below-market pricing: *setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark. What is meant by loss-leader pricing: * is meant not to increase sales but to attract customers in hopes they will buy other products as well, particularly the discretionary items with large markups.
Compare and contrast a one-price policy and a flexible price policy: * One-price policy:also called “fixed pricing” i s setting one price for all buyers of a product or service. Flexible-price policy: also called “dynamic pricing” involves setting different prices for products and services depending on individual buyers and purchase situations.How does single product pricing and product-line pricing differ: * single product pricing: must consider the price of other items in its product line or related product lines in its product mix. Product-line pricing: the setting of prices for all items in a product lineDiscuss company effects, customer effects and competitor effects on pricing decisions: *pg. 372-373Discuss what is meant by price wars: involves successive price cutting by competitors to increase or maintain their unit sales or market shareDiscuss the concepts of incremental costs and incremental revenues: * pg. 374What are the three types of special adjustments to a list or quoted price? Discuss the differences between them. Discounts: are reductions from the list price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller. Allowances: like discounts are reductions from list or quoted prices to buyers for performing some activity. “Include trade-in, and promotional allowances”Discuss the four types of price discounts. 1) Quantity discounts: encourage customers to buy larger amounts. 2.) Seasonal Discounts: to encourage buyers to stock inventory earlier than their normal demand would require. 3.) Trade discounts: reward wholesalers and retailers for marketing functions they will perform in the future, a manufacturer often gives trade discounts. 4.) Cash discounts: to encourage retailers to pay their bills quickly, manufactures offer 2% discounts if you pay with 10 days with cash.
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