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| The money or other considerations (including other products) exchanged for the ownership or use of a product or service. |
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| Ratio of perceived benefits to price. |
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| Profit = Total Revenue - Total Cost |
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| Demand Oriented Pricing Approaches |
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| weigh factors underlying expected customer tastes and preferences more heavily than such factors as cost, profit, and competion when selecting a price level. |
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| setting the highest initial price that customers really desiring the product are willing to pay. |
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| Setting a low initial price on a new product to appeal immediately to the mass market. |
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| setting a high price so that quality or status conscious consumers will be attracted to the product and buy it. |
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| setting prices a few dollars or cents under an even number. |
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| Manufacturers estimate the price, and work backwards through markups taken by retailers and wholesalers to determine what price they can charge wholesalers for the product. |
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| Marketing of two or more products in a single package price. |
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| charging of different prices to maximize revenue for a set amount of capacity at any given time. |
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| Competition-Oriented Pricing Approaches |
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| Rather than emphasize demand, cost, or profit factors, a price setter can stress what competitors or "the market" is doing. |
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| Tradition, standardized channel of distribution, or other competitive factor dictate the price. |
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| graph relating the quanity sold and the price, which shows how many units will be sold at a given price. |
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| depends on many factors such as demographics, culture, and technology. |
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| Price and Availability of Similar Products |
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| As the price of substitutes falls or their availabilty increases, the demand for a product will fall. |
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Definition
| as real consumer income increases, demand for a product also increases. |
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1. Consumer Tastes
2. Price and Availability of Similar Products. |
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Definition
| What 2 factors influence what consumers want to buy? |
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| What factor affects what consumers can buy? |
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| factors that determine consumers willingness and ability to pay for products and services. |
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| Price Elasticity of Demand |
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| Percentage change in the quanitity demanded relative to a percentage change in price. |
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Term
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Definition
| slight decrease in price results in a relatively large increase in demand or products sold. |
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| Slight increases or decreases in price will not significantly affect demand or units sold. |
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| The total money received from the sale of a product. |
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| total expense incurred by a firm in producing and marketing a product. |
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Term
| TC = Fixed Costs + Variable Cost |
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Definition
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| SUm of the expense of the firm that are stable and do not change with the quantity of a product that is produced and sold. |
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| Sums of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. |
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Definition
| is expressed on a per unit basis |
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| Variable Costs / Quantity |
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Definition
| Unit Variable Cost Equation |
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Definition
| a technique that examines the relationship between total revenue and total cost to determine profitability at different levels of output. |
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Fixed Cost /
(Unit Price - Unit Variable Cost) |
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Definition
| Break Even Point Equation |
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Term
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Definition
| Graphic presentation of the break even analysis. |
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Term
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Definition
| because of its simplicity, its used extensively in marketing, most frequently to study the impact on profit of changes in price, fixed cost, and variable cost. |
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Definition
| Expectations that sepcify the role of price in an organizations marketing and strategic plans. |
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| Managing for Long-Run Profits |
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Definition
| a company gives up immediate profit in exchange for acheiving a higher market share. |
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| Maximizing Current Profit |
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Definition
| Targets can be set and performance measures quickly. |
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Definition
| occures when a firm sets a profit goal, usually determined by its board of directors. |
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Term
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Definition
| Given that a firm's profit is high enough for it to remain in business, an objective may be to increase ______, which will in turn lead to increase in market share and profit. |
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Definition
| ratio of the firm's sales revenues or unit sales to those of the industry. |
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Term
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Definition
| many firms use ___ ______, the quantity produced or sold, as a pricing objective. |
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Definition
| Profits, sales and market share are less important objectives of the firm than mere ________/ |
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Definition
| A firm may forgo higher profits on sales and follow a pricing objective that recognizes its obligations to customers and society in general. |
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Definition
| Factors that limit the range of prices a firm may set. |
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1. Demand for the Product Class, Product and Brand
2. Newness of Product: Stage in the Product Life Cycle
3. Cost of Producting and Marketing the Product
4. Competitors Prices
5. Legal and Ethical Considerations |
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Definition
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Term
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| Conspiracy among firms to set prices for a product. |
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Definition
| When 2 or more competitors collude to explicitly or implicitly set prices. |
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Definition
| involves controlling agreements between independent buyers and sellers (a manufacturer and a retailer) whereby sellers are required to not sell products below a minimum retail price. |
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| Resale Price Maintenance. |
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Definition
| Vertical Price Fixing is called.... |
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Term
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Definition
| the practice of charging different prices to different buyers of good of like grade and quality. Not all price difference are illegal, just those that substantitally lessen competition or create a monopoly are deemed unlawful. |
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| Price deals that mislead consumers. |
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Definition
| example of deceptive pricing. Firm offers really low price on a product to attract customer into store. Once in store the customer is persuaded to purchase a higher priced item using a variety of tricks. |
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Definition
| charging a very low price for a product with the intent of driving competitors out of business. |
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| One Price Policy or Fixing Pricing |
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Definition
| setting on price for all buyers of a product or service. |
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Definition
| seting dfferent prices for products and services depending on individual buys and purchase situations in light of demand, cost, and competitive factors. |
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| Reductions in unit cost for a larger order. |
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| discount to encourage buyers to stock inventory earlier than their normal demand would require. |
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| Trade (Functional) Discounts |
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Definition
| To reward wholesalers and retailers for marketing functions, they wil perform in the future, a manufacturer often gives this type of discount. |
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| Discount to encourage retailers to pay their bills quickly. |
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| reductions from list or quoted prices to buyers for performing some activity. |
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