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14 Cards in this Set
- Front
- Back
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Describe price.
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Price is the amount of money charged for a product or service, or the sum of the values that
consumers exchange for the benefits of having or using the product or service. |
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What are the 2 Considerations in price setting?
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1. Customers perceptions of value (Price ceiling – no demand above this price)
2. Product costs (Price floor – no profits below this price) |
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What is Value-based pricing?
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– buyer’s perception of value sets the price
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What is Cost-based pricing?
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– total cost of producing the product determines the price
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Cost plus pricing is the simplest method for pricing:
What does it involve? |
Involves adding a standard mark-up to the cost of the pro
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What is A mark-up or mark-down ?
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is the difference between the selling price and cost as a percentage of selling price or cost
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What is the Break-even pricing?
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means setting price to break even on the costs of making and marketing a product.
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Which 2 factors Factors affecting the price?
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*Internal *External
Objectives and mix Nature of the market and demand Cost of production Competitors strategy and prices Environmental factors |
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What is Target costing?
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- the maximum amount of cost that can be incurred on a product at a particular selling
price. |
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Pricing depends on the type of market.
(4 types of markets) |
Pure competition
Monopolistic competition Oligopolistic competition Pure monopoly |
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What is Price elasticity?
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- a measure of the sensitivity of demand to changes in price
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What is Market skimming?
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means setting a high price for a new product to skim maximum revenues layer by
layer from the segments willing to pay the high price |
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What is Market penetration?
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means setting a low price for a new product to attract large numbers of buyers and a large market share
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Which are the Price adjustment strategies?
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"adjusting basic prices to account for various customer differences and changing situations"
*Discount and allowance pricing – reward customers for certain responses *Segmented pricing - *Psychological pricing – considers what the product says rather than pure economics *Promotional pricing - prices below costs for short period to attract customers *Geographical pricing - dependent on different parts of the country *Dynamic pricing – dependent on different customers/clients *International pricing – dependent on country |
