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15 Cards in this Set
- Front
- Back
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Price
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The assignment of value, or the amount of costumers must exchange to receive the offering
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The most important consumption consideration
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reasonable price (fair and affordable)
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Steps in price planning
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1. develop pricing objectives
2. estimate demand 3. determine costs 4. evaluate the pricing environment 5. choose a pricing strategy 6. develop pricing tactics Most important step is the FIRST step |
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marketers can also sometimes influence the nature of the dame curve by
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shifting it upwards (very successful advertising campaign)
the effect of an upwards shift in a demand curve is to increase quantity demand for a given price |
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acceleration principle
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a principle that holds that a small change in consumer demand for a product can result in a large change in the demand for org goods and services to produce the product
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elastic demand
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demand in which changes in price have large effects on the amount demanded (vacations)
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interpretation
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if the calculated price elasticity is greater than 1.0 demand is elastic
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variable costs
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the costs of production (raw and processed materials, parts and labor) that are tied to and vary depending on the number of units produced
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fixed costs
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costs of production that do not change with the number of units produced (e.g. costs of owning and maintaining the factory, utilities, equipment costs, salaries of firm executives)
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break even point
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the point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the firm will suffer a loss
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profit is maximized at the point
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at which marginal cost is exactly equal to marginal revenue
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EDLP
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PLease note that EDLP is a form of pricing based on customer needs
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Whether customers prefer EDLP or promotion sales
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Customers prefer EDLP
everyday low pricing |
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penetration pricing
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a pricing strategy in which a frim introduces a new product at a very low price to encourage more customers to purchase it
this is often used to discourage competitors from entering the marketplace here penetration pricing acts as a barrier to entry |
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two-part pricing
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requires two separate types of payments to purchase the product
Rec center plus racquetball fee |
