question
This type of analysis demonstrate the impact of small change in price on profit
answer
price sensitivity analysis
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according to your text, which costs have no effect on a marginal price change decision?
answer
fixed cost
question
marketers are said to be elastic when a ----- change in price has a ------ effect on the quantity sold .
answer
Small ; large
question
markets are said to be inelastic when a large change in price has a small effect on the quantity sold
answer
Large ; small
question
Gabby manufactures t-shirts and sells them for for $29.99. sales aren't as high as she would like, so she decides to run 20% off sale, bringing the t-shirt price down to 24. Gabby assumes lower prices will equal higher demand. why could a price cut not be the right answer in this situation?
answer
...
question
This market research technique allows researches to measure consumer preferences between products .
answer
conjoint analysis
question
customers perception driven pricing has become the dominant approach to pricing in many industries
answer
true
question
these types of products represent more than 98% of new products on the market. they make improvements to the status quo rather than disrupt a product industry:
answer
Evolutionary markets
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this type of market is created by the introduction of the first product into a new market and is therefore more difficult to set prices:
answer
Revolutionary
question
list one of the three dominant approaches to setting prices
answer
1. exchange value approaches to setting prices
2. economic price optimization
3. conjoint analysis
2. economic price optimization
3. conjoint analysis
question
according to the text, what is one of the primary focuses of brading?
answer
Reduce price sensitivity
question
the investment of time and effort that a consumer spends on a purchase decision are referred to as what?
answer
opportunity cost
question
current economic theory states that this is the primary motivator for any transaction
answer
self-interests
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in the context of promotional influence, this type pf communication focuses on the brand and features or benefits of the product
answer
benefits-oriented
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in the context of prospect theory, this refers to setting pricing expectations early and changing them slowly over time
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anchoring
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is the cost consumers pay for a product
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Price
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Exchange value
answer
quantify the price boundaries
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exchange value models help us
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- Identify a rational range for price
- Communicate with stakeholders
- Communicate with stakeholders
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Extreme boundaries of price
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the price should lie between the marginal cost to produce and the full consumer utility
question
marginal cost
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constitute the seller's bottom line. any price below marginal costs leaves the seller worse off than it would have been without the transaction
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extreme lower boundary
answer
marginal cost
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extreme upper boundary
answer
consumer utility
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customer utility
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is the value a customer gains from having a product
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Narrower boundaries
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the range of prices that are most likely to encourage customer transactions and leave the firm in the most favorable position
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comparable alternatives
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are solutions that customers may have to accomplish the same or similar set of goals
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differential value
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is the change in customer utility that a product delivers in comparison to the alternative
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exchange value
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price of comparable alternative + differential value
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profit sensitivity analysis
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demostrate the impact of small change in price on profits . direct and indirect effects on profits
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indirect effect derives from
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influence price change on customer demand
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direct effect
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relationship between profits and prices
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volume hurdles
answer
the require demand increase to justify a price cut and allowable demand sacrifice to justify a price hike
- quantify selling goal
- quantify selling goal
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price cut
answer
if we curt price we must increase sales volume
question
price hike
answer
if we raise the price, we can reduce volume sold
- new market -new distributiion channel -tide detergent = increase value
- new market -new distributiion channel -tide detergent = increase value
question
factors that influence price sensitivity of customers
answer
-Reference Price
-Ease of comparison
-Switching cost
-Ease of comparison
-Switching cost
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How can we reduce price sensitivity?
answer
- Brand strength
- Customer service
- Customer service
question
elastic market
answer
small change in price has large effect on hte quantity sold
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inelastic market
answer
when large change in price has only a small effect on the quantity sold
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