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
Three main pricing strategies
answer
Costumer value- based
Cost based
Competition based
Cost based
Competition based
question
costumer 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
competitive based pricing
answer
setting prices based on competitors' strategies, prices, costs, and market offerings
question
price floor
answer
a minimum price for a good or service, no profit below this cost
question
price ceiling
answer
maximum legal price that can be charged for a product, no demand above this price
question
Value
answer
When customers buy something, they exchange something of ___ to get something of ____
question
Customer value-based
answer
Effective _______ _______________ pricing understands and involves understanding how much value a customer places on the benefit they receive from the product, and setting a price that captures that value
question
Before
answer
In costumer value-based price, marketers often set a price ____ they set the rest of the marketing program
question
Cost based pricing steps
answer
1. Design a good product
2. Determine product costs
3. Set price based on cost
4. Convince buyers of product's value
2. Determine product costs
3. Set price based on cost
4. Convince buyers of product's value
question
Value-based pricing steps
answer
1. Assess customer needs and value perceptions
2. Set target price to match customer perceived value
3. Determine costs that can be incurred
4. Design product to deliver desired value at target price
2. Set target price to match customer perceived value
3. Determine costs that can be incurred
4. Design product to deliver desired value at target price
question
Costumer value based pricing strategies
answer
Good value pricing
Value-added pricing
Value-added pricing
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
competition-based pricing strategies
answer
Set prices based on competitors strategies, costs, prices and market offerings
Not match or beat competition prices, instead set price relative to value
Not match or beat competition prices, instead set price relative to value
question
total cost per unit formula
answer
Variable cost per unit +(fixed cost/unit produced)
question
variable cost per unit
answer
remains constant, raw materials.
question
fixed costs
answer
Costs that do not vary with the quantity of output produced
question
Price formula
answer
Unit cost / (1 - rate of return)
question
Drops
answer
Cost per unit ____ with accumulated production experience
question
break even volume
answer
The number of units you need to sell to cover total fixed costs
question
Break even volume formula
answer
fixed cost/(price-variable cost)
question
Target profit volume
answer
Numbers of units needed to sell to cover all costs AND make desired Rate of interes
question
Target Profit Volume formula
answer
(Fixed cost + target profit)/ (price - variable cost)
question
Different price
answer
If target market volume does not seem probable or company seeks higher return, they need to set a ___
question
Main rule of consumer demand
answer
Higher prices mean fewer units sold (higher margin per unit)
Lower prices more unit sold (lower margin pr unit)
Lower prices more unit sold (lower margin pr unit)
question
Margins
answer
Calculated on the selling price
Selling price = cost / (1 - margin)
Selling price = cost / (1 - margin)
question
Mark-ups
answer
Added to the cost
Selling price = cost * (1 + markup)
Selling price = cost * (1 + markup)
question
Factors affecting price decision
answer
Price needs to cover cost
Price should match overall strategy
Price need to reflect the type of market in which you are platting
Economy
Government intervention
Reseller reaction
Affect on brand image
Price should match overall strategy
Price need to reflect the type of market in which you are platting
Economy
Government intervention
Reseller reaction
Affect on brand image
question
target costing
answer
pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
question
Price should match your overall strategy
answer
If a company has selected its target market and position carefully, marketing mix target will be straight forward
question
pure competition
answer
the market structure that exists when there are many small businesses selling one standardized product
question
monopolistic competition
answer
a market structure in which many firms sell products that are similar but not identical
question
oligopolistic competition
answer
Few firms many buyers
question
pure monopoly
answer
A market structure in which one firm sells a unique product, into which entry is blocked, in which the single firm has considerable control over product price, and in which nonprice competition may or may not be found.
question
economy
answer
Weaker _____ put downward pressure on price
question
government intervention
answer
Price gouging and price fixing are illegal
question
Price elasticity
answer
A measure of how sensitive customers are to changes in price
question
The demand curve
answer
a curve that shows the relationship between the price of a product and the quantity of the product demanded
question
inelastic demand
answer
A situation in which an increase or a decrease in price will not significantly affect demand for the product. Absolute value of elasticity is less than 1
question
elastic demand
answer
A situation in which consumer demand is sensitive to changes in price, absolute value of elasticity is greater than 1
question
elasticity formula
answer
% change in quantity demanded / % change in price
question
Factors affecting elasticity
answer
1. Number of substitutes
2. Necessity vs luxury
3. Definition of market
4. Time
5. % of consumers income
2. Necessity vs luxury
3. Definition of market
4. Time
5. % of consumers income
question
Number of substitutes
answer
The more substitutes for a good, the higher the price elasticity of demand; the fewer substitutes for a good, the lower the price elasticity of demand.
question
Necessity vs. Luxury
answer
necessity: inelastic
luxury: elastic
luxury: elastic
question
Definition of market
answer
the more narrowly we define a market, the more elastic demand will be
question
Time
answer
Shorter time frame, the more inelastic
question
% of consumers income
answer
The higher % of consumers income the good represents, the more elastic
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
