question
price equation
answer
price = list price - incentives and allowances + extra fees
question
nature and importance of price
answer
price as an indicator of value
question
value equation
answer
value = perceived benefits/price
question
identifying price objectives and constraints (5 C's)
answer
-customers
-costs
-competition
-channel members
-company objectives
-costs
-competition
-channel members
-company objectives
question
customers as price constraints
answer
determine max price
-types of demand, brand preferences, positioning
-types of demand, brand preferences, positioning
question
costs as price constraints
answer
determine min price
-vc, fc, sunk costs
-vc, fc, sunk costs
question
competition as price constraints
answer
type, their offers, life cycle
question
channel members as price constraints
answer
wholesalers/retailers margin, number of mediators
question
company objectives as price constrains
answer
profit, sales, social responsibility
question
why do market share and profitability clash?
answer
-existing competitors have small margins
-1st to market or really high quality have high margins
-1st to market or really high quality have high margins
question
price elasticity of demand equation
answer
% change in quantity demanded / % change in price
question
cross elasticity
answer
demand for one good changes due to change in price for another good
question
break even point equation
answer
fixed cost / (unit price - unit variable cost)
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