Download Profit-oriented pricing

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Glossary
1. Bait-and-switch advertising: Promoting a low-priced item to attract customers to
whom the business then tries to sell a higher priced item
2. Business cycles: Periods of expansion and contraction in economic activities
3. Capital: Assets of a business
4. Cash flow: The movement of funds into and out of a business; determines the
amount of cash the business has to work with at any given time
5. Costs: The expenses involved with manufacturing, promoting, and distributing a
product
6. Elastic demand: A form of demand for products in which changes in price
correspond to changes in demand
7. Fixed costs: Business costs that are not affected by changes in sales volume
8. Growth stage: The product life cycle stage in which sales rise rapidly
9. Inelastic demand: A form of demand in which changes in price do not affect
demand
10. Introductory stage: The product life cycle stage when the product first appears in
the marketplace
11. Law of supply and demand: Economic principle which states that the supply of a
good or service will increase when demand is great and decrease when demand is low
12. Market price: Actual price that prevails in a market at any particular moment
13. Market share: An organization’s portion of the total industry sales in a specific
market
14. Mark-up: The difference between the cost of a product and its selling price
15. Maturity stage: The product life cycle stage in which sales peak and then increase
at a slower rate or start to decline
16. Monopolistic competition: A type of market structure in which a lot of businesses
sell similar products that have only a few differences
17. Obsolescence: The state of being outmoded or unfashionable
18. Oligopoly: A market structure in which there are relatively few sellers, and industry
leaders usually determine prices
19. Operating expenses: All of the expenses involved in running a business
20. Price discrimination: An illegal activity in which a business charges different
customers different prices for similar amounts and types of products
21. Price fixing: Illegal business agreement in which businesses agree on prices of
their goods or services, resulting in little choice for the consumer
22. Pricing objectives: Goals a company hopes to accomplish through its pricing
strategies
23. Product life cycle: The stages through which goods and services move from the
time they are introduced on the market until they are taken off the marketl o s s a r y
24. Product mix: The particular assortment of goods and services that a business
offers in order to meet the needs of its market(s) and its company goals
25. Profit: The income left once all expenses are paid
26. Profit maximization: A profit-oriented pricing objective intended to give the firm
the most possible profit
27. Profit-oriented pricing: A category of pricing objectives that focus on profit for the
business
28. Pure competition: A market structure in which there are many businesses selling
a lot of identical products for about the same price to many buyers
29. Pure monopoly: A condition in which a market is controlled by one supplier, and
there are no substitute goods or services readily available
30. Quality: The degree of excellence of a good or service—how good it is
31. Return on investment: A profit-oriented pricing objective in which the business
bases
the amount of profit it wants to earn on the amount of its capital investment
32. Return on sales: A profit-oriented pricing objective in which the business bases
the amount of profit it wants to earn on the amount of its sales; often called target
return
33. Sales-oriented pricing: A category of pricing objectives that focus on increasing
total amount of income from sales
34. Sales volume: The amount of a firm’s sales; usually expressed in dollars
35. Selling price: The amount a seller charges the purchaser for a good or a service
36. Target market: The particular group of customers a business seeks to attract
37. Target return: See return on sales
38. Total costs: All of a business's costs, both fixed and variable
39. Unit pricing: A pricing technique in which consumers are given the price per unit
(pound, ounce, etc.) for products
40. Variable costs: Business costs that change according to changes in sales volume