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Chapter 10 Denitions

Price: The amount of money charged for a product or service, or the sum of the values that buyers exchange for the benets of having or using the product or service. Value-Based Pricing: Setting price based on buyers' perceptions of value rather than on the seller's cost. Everyday Low Pricing (EDLP): A pricing strategy that charges comparatively low prices all the time, with few or no "sales." Good-Value Pricing: Offering just the right combination of quality and good service at a fair price. Value-Added Pricing: A strategy of developing features that add value to the market offering, rather than cutting price. Oligopolistic Competition: A market condition where there are few sellers, and each is highly sensitive to the others' prices. Fixed Costs: Costs that do not vary with number of products produced. Target Costing: Pricing that starts with an ideal selling price, then dictates costs that will ensure that the price is met. Demand Curve: A graphical representation of the relationship between price and demand that usually proposes that demand increases as price decreases. Variable Costs: Costs that vary directly with the number of products produced. Target Prot Pricing: A pricing method that calculates break-even price for a product then adds a desired (target) prot. Pure Competition: A market condition in which there are many buyers and sellers trading in commodities. Price Elasticity: A measure of the sensitivity of demand to changes in price. Monopolistic Competition: A market condition in which many buyers and sellers trade a variety of products over a range of prices, rather than allowing the market to set the price. Break-Even Pricing: Setting price to break even on the costs of making and marketing a product; or setting price to make a target prot. Cost-Plus Pricing: Adding a standard markup to the total cost of producing (or purchasing) the product. Pure Monopoly: A market condition where there is only one seller of a service, product, or commodity.

Market Skimming Pricing (Price Skimming): Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the price. Market Penetration Pricing (Penetration Pricing): A strategy that sets a low price for a new product to attract a segment of buyers, then raises the price. Product Line Pricing: Setting the price steps among products in a product line based on cost differences and customer perceptions of the products' values. By-Product Pricing: Setting a price for by-products to make the main product's price more competitive. Optional-Product Pricing: The pricing of optional or accessory products along with a main product. Captive-Product Pricing: Setting a price for products that must be purchased along with a main product. Bundle Pricing: Setting one price for a set of products. This price is valid only if all the products in the set are purchased.