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price
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The amount of money exchanged for a good or service
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Customer value-based pricing
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setting price based on buyers' perceptions of value rather than on the seller's cost
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good value pricing
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offering just the right combination of quality and good service at a fair price
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everyday low pricing (EDLP)
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setting prices lower than competitors and then not having any special sales
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high/low pricing
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involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
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Value-added pricing
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attaching value-added features and services to differentiate a company's offers and charging higher prices
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cost-based pricing
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setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk
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Pricing in Different Types of Markets
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pure competition, monopolistic competition, oligopolistic competition, pure monopoly
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pure competition
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many firms selling commodities for the same prices
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Oligopoly
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a handful of firms con
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Monopoly
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one firm controls the market
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monopolistic competition
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many firms selling differentiated products at different prices
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price-demand relationship
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- demand curve shows number of units the markets will buy at different prices
- inverse relationship between price and quantity
-higher price=lower demand
- inverse relationship between price and quantity
-higher price=lower demand
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price elasticity of demand
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a measure of the sensitivity of demand to changes in price
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inelastic demand
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situation in which a product's price change has little impact on the quantity demanded by consumers
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elastic demand
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demand changes greatly with a small change in price
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