question
Price
answer
the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service
question
Customer value-based pricing
answer
setting price based on buyers' perceptions of value rather than on the seller's cost
question
Cost based pricing
answer
setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.
question
Diagram of Cost-based pricing
answer
Design a good product-> Determine product costs -> Set price based on cost -> Convince buyers of product's value
question
Diagram of Value-based pricing
answer
Assess customer needs and value perceptions -> Set target price to match customer-perceived value -> Determine costs that can be incurred -> Design product to deliver desired value at target price
question
Good-value pricing
answer
offering just the right combination of quality and good service at a fair price
question
Value-added pricing
answer
attaching value-added features and services to differentiate a company's offers and charging higher prices
question
Cost-based pricing
answer
setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk
question
Fixed costs (overhead)
answer
costs that do not vary with production or sales level
question
Variable costs
answer
costs that vary directly with the level of production
question
total costs
answer
the sum of the fixed and variable costs for any given level of production
question
experience curve (learning curve)
answer
the drop in the average per-unit production cost that comes with accumulated production experience
question
cost-price pricing (markup pricing)
answer
adding a standard markup to the cost of the product
question
break-even pricing (target return pricing)
answer
setting price to break even on the costs of making and marketing a product, or setting price to make a target return
question
competition-based pricing
answer
setting prices based on competitors' strategies, prices, costs, and market offerings
question
target costing
answer
pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
question
Demand curve
answer
A curve that shows the number of units the market will buy in a given time period at different prices that might be charged.
question
Different types of pricing in different markets
answer
Pure competition (markets do not spend money on marketing strategy), Monopolistic competition (sellers try to develop differentiated offers for different customer segments), oligopolistic competition (market consists of few large sellers so each is very aware of competitors' prices), pure monopoly (price is handled differently in each case)
question
price elasticity
answer
a measure of the sensitivity of demand to changes in price
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
