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19 Cards in this Set
- Front
- Back
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ALDI |
Opening story |
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Price |
The exchange value of a good or service in the marketplace |
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profit volume competitive customer |
4 objectives of price setting |
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profit= satisfy owners volume=satisfy employees Competitive=stabilize business Customer=satisfy wants/needs |
What does each objective lead to? |
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Satus quo pricing |
When a competitor makes a price change and rivals follow suit |
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Non price competition |
Leaves price at a given level and adjusts other parts of the marketing mix, adding or subtracting value when appropriate |
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Global Economic Legal costs competitive |
5 major factors influencing price |
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Demand curve |
A depiction of the price elasticity demand for a given product |
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Price elasticity |
Measure of the sensitive of demand to changes in places |
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elastic when price has a major effect on demand inelastic when price has a little effect on demand |
When are price elastic or inelastic? |
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Cross-price elasticity of demand |
The extent to which the quantity demanded of one product changes in response to changes in the price of another product |
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elasticity- total industry cross-elasticity- applies to preferences for individual brands or substitutes |
What does elasticity and cross-elasticity apply to? |
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Position the product relative to costly substitutes Focus attention on unique features |
2 ways to reduce cross-price elasticity
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Incremental costs |
Costs that increase or decrease based on volume, including variable costs and certain fixed costs |
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Cost oriented pricing |
Adds an amount to the product called a markup |
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How much do we need to make a difference in profit? |
Profit v demand generator |
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Simplifies buying Stabilizes Prices |
Result of cost-plus pricing?***(2) |
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Must look at costs and forecast demand Prices go up when demand goes down Ignores strategy |
Rate of return pricing result (3) |
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Focuses on the break-even point. |
Rate of return pricing*** |
