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36 Cards in this Set
- Front
- Back
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Pricing Decisions |
Must be based on marketing and overall corporate objectives. |
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Price Elasticity |
How sensitive customers are to price change or how important price is as a buying criterion. |
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Price Elasticity of Demand |
The rate of percentage change in quantity demanded versus the percentage change in price. |
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Elastic Demand |
Consumers buy more or less of a product when the price changes. |
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Inelastic Demand |
An increase or decrease in price will not significantly affect demand. |
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Unitary Elasticity |
An increase in sales exactly offsets a decrease in prices, and revenue is unchanged. |
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Functional Benefits |
Are the design characteristics that might be attractive to technical personnel. |
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Operational Benefits |
Are durability and reliability, qualities desirable to production managers. |
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Financial Benefits |
Are favorable terms and opportunities for cost savings, important to purchasing managers and controllers. |
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Personal Benefits |
Are organizational status, reduced risk, and personal satisfaction. |
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Direct Traceable or Attributable Costs |
All costs, fixed, or variable, that are solely incurred for a particular product, territory, or customer. |
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Indirect Traceable Costs |
All costs, fixed, or variable that can be traced to a particular product, customer or territory. |
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General Costs |
Costs that support a number of activities not directly related to a particular product. |
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Variable Costs |
Expenses that are uniform per unit of output within a relevant time period. As volume increases, total variable costs increase. |
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Programmed Costs |
Result from attempts to generate sales volume. Ex. ad, sale promo, & sales salaries |
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Committed Costs |
Costs required to maintain the organization. Ex. rent, admin cost, & clerical salaries |
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Relevant Costs |
Future expenditures unique to the decision alternatives under consideration. Expected to occur in the future as a result of some marketing action. |
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Sunk Costs |
Past expenditures for a given activity. Typically irrelevant in whole or in part to future decisions. Ex. past marketing research and development expenditures. last year's ad expense. |
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Landed Cost |
Cost of the product at the source, plus the cost to transport the product to its destination. |
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Extent of the Market |
Point at which the lowest price (or landed cost) is equal for products of two firms. |
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Market Area |
For a seller is area where seller has a landed cost advantage over its competitor. |
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Price Skimming |
Intro. price set relatively high, thereby attracting buyers at top of product's demand curve. |
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Market Penetration Pricing |
Low price is used as an entering wedge. |
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Rapid-Skimming Strategy |
-Launch new product at high price. -High promotion level. |
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Slow-Skimming Strategy |
-Launch new product at high price. -Low promotion -Helps maintain high profit per unit. |
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Rapid-Penetration Strategy |
-Launch new product at low price. -Spend heavily on promo. -Allows fastest market penetration & share. |
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Slow-Penetration Strategy |
-Launch new product at low price. -Low level promo. -Encourages rapid product acceptance. -Allow slightly higher profits than rapid-penetration. |
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Price Leadership Strategy |
One firm initiate price changed, with most or all the other firms in the industry following suit. |
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Customer groups that use bidding |
1. Government 2. Many Not-For-Profit 3. Large Companies |
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Closed Bidding |
-Request for quotations (RFQ) -Suppliers submit a written bid on a specific contract and all bids are opened simultaneously and often job goes to lowest bidder. |
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On-line Sealed Bids |
Online Auctions |
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Open Bidding |
-More informal -Requests for Proposal (RFP) -When it's hard to rigidly define requirements -Prices may be negotiated |
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Operating Lease |
-Short term and cancelable -Lessor generally provides maintenance/service -Rarely contains purchase options |
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Direct-Financing Lease |
-Long-term and non-cancelable -Lessee responsible for operating expenses -Lessee has option of purchasing the asset |
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Advantages to buyer in leasing in BusMkt |
-No down payment -No risk of ownership |
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Advantages to seller in leasing in BusMkt |
-Increased sells -Ongoing business relationship w/ lessee -Residual value retained |
