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34 Cards in this Set
- Front
- Back
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What are the 4 Marketing Objectives
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Survival
Current profit maximization market share leadership product leadership |
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Survival
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Low prices to cover vairalbe costs and some fixed costs to stay in business
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Current profit maximization
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Choose the Price that produces the Maximum Current Profit
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Market Share Leadership
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Low as possible prices to become the market share leader
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Product leadership
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High Prices to Cover higher performance quality and Research and development.
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Fixed Costs
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Costs that dont Vary with sales or production levels
Example: Salaries and Rent |
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Variable Costs
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Costs that do Vary directly with the level of promotion.
Raw Materials Gas |
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Total Costs
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Fixed plus Variable costs.
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External Factors Affecting pricing Decsisions
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1. Market and Demand
2. Competitors' Cost Prices and offers 3. External Factors |
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Other External Factors that affect pricing decisions
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Economic conditions
reseller needs government actoins social concerns. |
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4 types of markets in terms of pricing
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1.Pure Compeition
2. Monopolistic Competition 3. Oligopolistic Competition 4. Pure Monopoly |
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Pure Competition
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Many Buyer and Sellers who have little effect on the price
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Monopolistic Competition
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Many buyers and sellers who trade over a range of prices
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Oligopolistic Competition
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Few Sellers who are sensitive to each others pricing/marketing Strategies
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Pure Monopoly
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Single Seller
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Demand Curve
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Curve that Shows the Number of Units the Market Will Buy in a Given Time Period at Different Prices that Might be Charged.
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Price Elasticity
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Refers to How Responsive Demand Will be to a Change in Price.
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Price Elasticity of Demand equation
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% Change in Quantity Demanded divided by % Change in Price
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Break-even units
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= fixed costs / gross margin
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Gross Margin
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Price-Variable costs
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Cost Based Pricing
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Starts with Product
Cost Price Value Customers |
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Benefits Based Pricing
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Starts with Customer
Value Price Cost Product |
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Competition-Based Pricing
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Setting Prices based on what competitors are charging, or what the firm thinks competitors will charge in the future
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Intent of Skimming
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Capture “cream” - less price sensitive buyers
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Focus of Skimming
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High profit margin
sacrifice volume |
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Result of Skimming
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Invite competitors short-term profits for reinvestment
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Intent of Penetration
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Sell whole market at one price - no elite markets
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Focus of Penetration
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High volume sacrifice profit margin
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Result of Penetration
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Keep competition out achieve economies of scale
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Alternative Solutions?
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What alternatives do buyers have for solving their problems?
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Ease of Comparison
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How difficult is it for buyers to compare the products of other suppliers; observe benefits?
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Unique Benefits
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Does the product have any unique benefits that differentiate it? Are they important to customers
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Monetary Significance
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How significant are buyers’ expenditures, both in absolute and percentage terms?
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Complimentary Costs
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To what extent must buyers make complementary expenditures
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