Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
19 Cards in this Set
- Front
- Back
|
Price |
the amount of money charged for a product or service
*sum of all the values that customers give up to gain the benefits of having or using a product or service |
|
|
Importance of Price |
It is the only element in the marketing mix that produces revenue; all others represent costs |
|
|
Major Pricing Strategies |
Value-Based Pricing Cost-Based Pricing Competition-Based Pricing |
|
|
Value-Based Pricing (stages) |
--Asses customer needs and value perceptions --Set target price to match perceived value --Determine costs (that can be incurred) --Design product |
|
|
Value-Based Pricing (definition) |
Uses buyers' perceptions of value as the key to pricing |
|
|
Good-Value Pricing |
Offers the right combination of quality and good service at a fair price |
|
|
Everyday low pricing (EDLP) |
Charging a constant everyday low price with few or no temporary price discounts |
|
|
Value-Added Pricing |
Attaches value-added features and services to differentiate offers, support higher prices, and build pricing power |
|
|
Cost-based pricing (steps) |
Design product Determine product costs Determine price based on costs Convince buyers of product's value |
|
|
Cost-based pricing (definition) |
Involves setting prices based on the costs of producing, distribution, and selling the product plus a fair rate of return for its effort and risk |
|
|
Types of costs |
Fixed (overhead)- do not vary Variable- vary with level of production |
|
|
Experience curve |
(or learning curve) the drop in the average cost with accumulated production experience |
|
|
Cost-Plus Pricing |
(or markup pricing) adding a standard markup to the cost of the product
unit cost = VC + (FC / unit sales) markup price = unit cost / (1- % markup) |
|
|
Break-Even Pricing |
(or target return pricing) setting price to break even on the costs of making and marketing a product, or setting price to make a target return
Break-even = FC / (price-VC) |
|
|
Competition-based pricing |
Involves setting prices based on competitors' strategies, costs, prices, and market offerings |
|
|
Target costing |
Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met |
|
|
Pricing in different types of markets (4) |
Pure competition- many buyers/sellers trading a similar commodity Monopolistic competition- many buyers/sellers who trade over a range of prices rather than single market price Oligopolistic competition- only a few large sellers Pure monopoly- one seller |
|
|
Price elasticity |
a measure of the sensitivity of demand to changes in price
price elasticity of demand = %change in quantity demanded / %change in price |
|
|
Inelastic vs. Elastic Demand |
Inelastic- demand hardly changes when there is a small change in price (steeper demand curve)
Elastic- demand changes greatly for a small change in price |
