question
Price
answer
the amount of money charged for a product or service; sum of all the values that consumers give up in order to gain the benefits of having or using a product or service; the only element in the marketing mix that produces revenue- all other elements represent costs
question
Major pricing strategies
answer
based on customer perceptions of value; product costs; market and competition; marketing strategy, objectives, mix
question
Value-based pricing
answer
customer driven; uses buyers' perceptions of value, not the seller's cost, as the key to pricing; 1. assess needs and value perceptions, 2. set target price, 3. determine costs, 4. design a product
question
Good-value pricing
answer
type of value-based pricing; offering just the right combination of quality and good service at a fair price; often includes less expensive items; ex) Taco Bell and McDonalds' value menus
question
Value-added pricing
answer
type of value-based pricing; is the strategy of attaching value-added features and services to differentiate their offers and thus support higher prices
question
Good value perceptions
answer
everyday low pricing; high-low pricing (value based pricing)
question
Everyday low pricing
answer
involves charging constant, everyday low price with few or no temporary price discounts (ex: Wal-Mart) (value based pricing)
question
High-low pricing
answer
involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items (ex: Kohl's) (value based pricing)
question
Cost-based pricing
answer
product driven; starting with costs involved in bringing the product to the market; 1. design a product, 2. determine costs, 3. set price based on cost, 4. convince buyers of the value; benefits: sellers are certain about costs, prices are similar in industry and price competition is minimized, buyers feel it is fair; disadvantages: ignores demand and competitor prices
question
break-even pricing
answer
type of cost-based pricing; the price at which total costs are equal to total revenue and there is no profit
question
target profit pricing
answer
type of cost-based pricing; the price at which the firm will break even or make the profit it is seeking
question
types of costs
answer
fixed, variable, total
question
fixed costs
answer
type of cost; overhead costs that do not vary with production or sales level; experience or learning curve is when average cost falls as production increases because fixed costs are spread over more units
question
variable costs
answer
type of cost; vary directly with the level of production; called variable because their total varies with the number of units produced
question
total costs
answer
type of cost; the sum of the fixed and variable
question
competition-based pricing
answer
pricing wares near, at, above, or below the competition; setting prices based on competitors' strategies, costs, prices, and market offerings; consumers will base their judgments of a product's value on the prices that competitors charge for similar products
question
target costing
answer
Starts with an ideal selling price based on customer-value considerations, and then targets costs that will ensure that the price is met
question
organizational costing
answer
• In small companies, prices are often set by top management rather than by the marketing or sales departments
• In large companies, pricing is typically handled by divisional or product line managers
• In industrial markets, salespeople may be allowed to negotiate with customers within certain price ranges
• In industries in which pricing is a key factor, companies often have pricing departments to set the best prices or to help others in setting them
• In large companies, pricing is typically handled by divisional or product line managers
• In industrial markets, salespeople may be allowed to negotiate with customers within certain price ranges
• In industries in which pricing is a key factor, companies often have pricing departments to set the best prices or to help others in setting them
question
pure competition
answer
the market consists of many buyers and sellers trading in a uniform commodity; no single buyer or seller has much effect on the going market price (ex: wheat, copper, financial securities)
question
monopolistic competition
answer
the market consists of many buyers and sellers who trade over a range of prices rather than a single market price; a range of prices occurs because sellers can differentiate their offers to buyers
question
oligopolistic competition
answer
the market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies
question
pure monopoly
answer
the market consists of one seller; the seller may be a government monopoly (USPS), a private regulated monopoly (a power company), or a private non-regulated monopoly (DuPont when it introduced nylon)
question
price and demand
answer
inversely related; For prestige (luxury) goods, higher price can equal higher demand when consumers perceive higher prices as higher quality
question
elasticity of demand
answer
• The percentage change in unit sales that results from a percentage change in price
• When changes in price have large effects on the amount demanded, demand is elastic
• When changes in price have little or no effect on the amount demanded, demand is inelastic
• Factors that affect price elasticity of demand: Unique product, quality, prestige, substitute products, cost relative to income
• When changes in price have large effects on the amount demanded, demand is elastic
• When changes in price have little or no effect on the amount demanded, demand is inelastic
• Factors that affect price elasticity of demand: Unique product, quality, prestige, substitute products, cost relative to income
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
