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28 Cards in this Set

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price
money/other considerations exchanged for the ownership/use of a g/s
Price equation
Price=List price - (incentives and allowances) + extra fees
value
ratio of perceived benefits to price
v=perceived benefits/price
value-pricing
practice of simultaneously increasing product and service benefits while maintianing/decrs price
profit equation
Profit=TR-TC
=(UPxQ)-TC

price affects: quantity sold, and indirectly affects costs
6 steps in price setting
-ID pricing objectives and constraints
-Est demand and revenue
-Det cost,vol, and profit rel
-select approp price level
-set list/quoted price
-make special adjustments to list/quoted price
pricing objectives
specifying the role of price in an org's marketing and strategic plans
managing for long-run profits
company gives up immed profit in exchange for achieving a higher market share by developing quality products to penetrate competitive markets
maximizing current profit
targets can be set and performance measured quickly
market share
ratio of firm's sales rev or unit sales to those of the industry; pursued when industry sales are rel flat/declining
unit volume
Q produced/sold as a pricing objective
sell multiple products at difff prices therefore need to match unit vol demanded by customers w/price and production capacity
pricing constraints
limit the range of prices a firm may set
-demand for product class, product, and brand
-newness/stage in product life cycle
-single vs product line
-cost of covering and marketing product
-cost of changing prices and time pd they apply
-type of competitive mkts: pure monopoly, oligopoly, monopolistic competition, pure competition
-competitors' prices
demand curve
influenced by:
consumer tastes, price and avail of similar products, consumer income
dec price, move along curve
incrs in consumer income, shift curve
demand factors
det consumer's willingness and ability to pay for g/s
Total revenue
total money received from the sale of the product
TR=PxQ
Avg rev
avg amt of $ rec for selling one unit of a product (price per unit)
AR=TR/Q=P
Marginal rev
change in total rev that results from producing and marketing one add unit
MR=Change in TR/1u increase in Q=slope of TR curve

always falls at twice the rate as the D curve
price elasticity of demand
how sensitive consumer demand and firm's rev are to changes in product price
E = % ∆ Quantity demanded/ %∆P

usually neg #
elastic demand
1% dec in P produces >1% increase in Q demanded
inelastic demand
1% dec in P produces <1% increase in Q demanded, dec rev
unitary demand
%change in price produces less then a 1%change in Q demanded so that sales rev remains the same; Price elasticity = 0
Total cost
total expense incurred by a firm in producing and marketing a product
=FC+VC
unit variable cost
vc/q
marginal cost
change in total cost that results from proudcing and marketing one add unit of a product
marginal analysis
continuing, concise trade-off of incremental costs against incremental revenues. as long as MR>MC, a firm will expand output of that product
break-even analysis
relationship btwn TR and TC to det profitability at various levels of output
Break even point
quantity at which TR=TC. profit then comes from all units sold beyond the BEP
BEPquantity = FC/P - UVC
break even chart
where TR and TC curves intersect ; BEP is where profit = 0