Term
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Definition
• Value= Benefits-Costs
• The value that you exchange for the benefits of having or using the product/service (time (drive further to save a dime on gas), psychological (willing to drive car with porn on it, super embarrassing) |
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Term
| Internal Factors of Price? |
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Definition
• We control marketing objectives like maximize profit, gain market share, infer a level of quality, to survive
• We control market mix strategy (price needs to be consistent with other 3 P’s) |
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Term
| External Factors of Price? |
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Definition
| • Can’t control these well. Example- demand for your product, competition, economy. |
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Term
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Definition
| tells us how much the demand for a product will change with a change in price. |
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Term
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Definition
| numerator greater then elastic demand good (quantity of demand/change in price) price change affects this, example is bottled water. E greater than 1.0 |
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Term
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Definition
| price change does not affect demand (cigarettes or medicine- ppl must have these products) E is less than 1.0 |
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Term
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Definition
an increase in sales exactly offsets a decrease in prices, and revenue is unchanged.
arrows in same direction inelastic |
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Term
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Definition
| o Selling Price = Markup in dollars + Cost |
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Term
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Definition
| o Break even point in units= fixed cost/ (selling price-variable cost per unit) |
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Term
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Definition
| ideal situation, markets will operate at the point where marginal costs equal marginal revenue. |
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Term
| Other Determinants of Price |
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Definition
o Competition- high price may induce firms to enter the market, competition ca lead to price wars, global competition may force firms to lower prices
o Distribution – in particular, Selling against the Brand which is stocking well known branded items at high prices in order to sell store brands at discounted prices. |
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Term
| New Product Pricing Strategies-o Market Skimming |
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Definition
- high prices, innovators
• Premium
• Overcharging
• Early adapters value product
• Demand is inelastic |
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Term
| New Product Pricing Strategies-o Market Penetration |
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Definition
low prices, attract buyers quickly
• Good-value
• Economic
• Demand is elastic |
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Term
| New Product Pricing Strategies- o Status Quo- |
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Definition
| - in the middle, suggest similar quality and value as competitors |
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Term
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Definition
| creates several versions of products at different prices. Example Marriott hotels pay for courtyard to jw |
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Term
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Definition
| -razor and blades mentality, get you to buy an xbox then have to buy everything else |
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Term
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Definition
| package deal, combine related goods, co-branding. Examples mcdonalds meal |
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Term
| Price Adjustment Strategies |
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Definition
o Discounts/Allowances- cash, quantity, seasonal, promotional
o Flexible/variable-different segments pay different rates (student discounts), off peak daily rate changes
o Psychological-odd even pricing, the 99 principle
o Single price- everything a $1
o Bait –illegal pricing, can’t say we have $10 toaster to get people there so they are forced to buy the $3o one
o Two-part- country club, pay initiation then fees to eat golf
o Loss leader-best buy used this, every cd was cheap just to get people in the store |
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Term
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Definition
| price sensitive toward so don’t see a difference in product like bottled water. When a decrease on one product results in a decrease in sales of a second product. |
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Term
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Definition
| products that go together, like peanut butter and jelly |
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Term
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Definition
| set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. Ex: coke sells to hundreds of stores instead of hundreds of consumers |
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Term
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Definition
| -proves retailers are good, similar go to the store to compare all of the models at one location |
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Term
| Designing a Marketing Channel and Benefits to Consumers |
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Definition
• Different product sizes (different types of soda sizes)
• Assortment of goods
• Location
• Hours of operation |
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Term
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Definition
increased automation, outsourcing, electronic distribution
o Physical Distribution-transportation and warehousing of goods
o Warehousing-impacted by technology |
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Term
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Definition
| - transactional functions, logistical, and facilitating |
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