MKT - Ch. 7 Test Review

generating long-term profits by taking advantage of economies of scale and growing the market share

• short-term profit maximization
• short-term revenue maximization
• maximize profit margin
• differentiation

attracting customers by pricing your product either much higher or much lower than the competition

• short-term profit maximization
• short-term revenue maximization
• maximize profit margin
• differentiation

relying on large profits on each sale; i.e. high priced luxury items and artists selling their painting/other pieces

• short-term profit maximization
• short-term revenue maximization
• maximize profit margin
• attracting customers by pricing your product either much higher or much lower than the competition

setting your prices to maximize your short-term profits; this is an approach that is often used by a bootstrapper

• short-term profit maximization
• short-term revenue maximization
• maximize profit margin
• differentiation

cost-plus

• A company determines the cost of producing a product and then adds on a specific percentage to arrive at a retail price
• Pricing the product at a relatively low initial price to attract customers
• Pricing products at a loss to bring people into the store

skimming

• Pricing products at a loss to bring people into the store
• Pricing the product at a relatively low initial price to attract customers
• Pricing the product relatively high initially, knowing that you will make sales to the early adopters who want to be "the first to have the product."

penetration

• Pricing staple items very low to get customers into the store
• Pricing the product at a relatively low initial price to attract customers
• Selling a product or service at a very low price in an attempt to push a competitor out of the market, or force them out of business entirely

leader

• A flexible pricing strategy that allows a company to react to a variety of factors, in setting the optimal price for a product or service
• Pricing products at a loss to bring people into the store
• Pricing staple items very low to get customers into the store

loss leader

• Pricing products at a loss to bring people into the store
• Pricing staple items very low to get customers into the store
• Pricing high to capitalize on the assumption that higher prices reflect better quality

premium

• Pricing high to capitalize on the assumption that higher prices reflect better quality
• A flexible pricing strategy that allows a company to react to a variety of factors, in setting the optimal price for a product or service
• Offering a basic or stripped down version of a product or service for free, and then charging a "premium" for more features or functionality