8.6 Key Terms

Cash Discounts: These are reductions on the base price given to customers for paying cash or within some short time period. 8.1

Currency: Is any form of money in general circulation in a country. 8.4

Customer-Oriented Pricing: Is also referred to as value-oriented pricing. Given the centrality of the customer in a marketing orientation (and this marketing course!), it will come as no surprise that customer-oriented pricing is the recommended pricing approach because its focus is on providing value to the customer. Customer-oriented pricing looks at the full price-value equation (above) and establishes the price that balances the value. 8.1

Foreign Exchange: Is money denominated in the currency of another country or—now with the euro—a group of countries. Simply put, an exchange rate is defined as the rate at which the market converts one currency into another. 8.4

Personal Allowances: Are similar strategies aimed at middlemen. Their purpose is to encourage middlemen to aggressively promote the organization’s products. 8.1

Profit-Oriented: Pricing places an emphasis on the finances of the product and business. A business’s profit is the money left after all costs are covered. In other words, profit = revenue – costs. In profit-oriented pricing, the price per product is set higher than the total cost of producing and selling each product to ensure that the company makes a profit on each sale 8.1

Quantity Discounts: Are reductions in base price given as the result of a buyer purchasing some predetermined quantity of merchandise. 8.1

Seasonal Discounts: are price reductions given for out-of-season merchandise—snowmobiles discounted during the summer 8.1

Trade Discounts: Are price reductions given to middlemen (e.g., wholesalers, industrial distributors, retailers) to encourage them to stock and give preferred treatment to an organization’s products. 8.1