Marketing Chapter 11 (Exam 3) – Flashcards
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Price elasticity of demand refers to
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the percentage change in quantity demanded relative to the percentage change in price.
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Which of the following is NOT a pricing constraint?
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competitors' prices
demand for the product class
newness of the product or stage in its product life cycle
social responsibility impact of the product on society
cost of producing and marketing the product
social responsibility impact of the product on society
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What is prestige pricing?
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setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it
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To enable manufacturers to smooth out manufacturing peaks and troughs and thereby contribute to more efficient production, manufacturers offer
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seasonal discounts.
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College students pay tuition, fees, and other charges each year to attend their educational institution. Using the price equation, what is the final price or cost to attend college for a typical semester based on the following data for an in-state student: Tuition = $4,000; technology fee = $25; healthcare insurance = $50; student activity fee = $25; room & board = $5,000; books = $500; transportation & parking = $400; financial aid from work study (10 hours per week at $10 per hour wage) = $100; scholarships = $500; and a discount of $400 for taking 15 credit hours?
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$9,000
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Final Price Equation
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List Price- (Incentives + Allowances) +Extra Fees
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Value Ratio
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Perceived Benefits/Price
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Profit Equation
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Total Revenue-Total Cost
(Unit Price x Quantity Sold)-(Fixed Cost + Variable Cost)
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Prestige Pricing
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setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it
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Odd-Even Pricing
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setting prices a few dollars or cents under an even number.
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Target Pricing
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the manufacturer deliberately adjusting the composition and features of a product to achieve the target price to consumers
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Bundle Pricing
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the marketing of two or more products in a single package price
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Yield Management Pricing
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the charging of different prices to maximize revenue for a set amount of capacity at any given time
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Standard Markup Pricing
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adding a fixed percentage to the cost of all items in a specific product class
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Cost-Plus Pricing
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summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
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Target Profit Pricing
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When a firm sets an annual target of a specific dollar volume of profit
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Target Return-on-Sales Pricing
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set prices that will give them a profit that is a specified percentage—say, 1 percent—of the sales volume
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Target Return-on-Investment Pricing
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set prices to achieve a return-on-investment (ROI) target such as a percentage that is mandated by its board of directors or regulators
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Above-, At-, or Below-Market Pricing
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Using the benchmark of a competitor's price or the market price, firms deliberately choose a strategy
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Loss-Leader Pricing
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retail stores deliberately sell a product below its customary price to attract attention to it
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Demand Curve
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a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price
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Demand Factors
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Consumer taste
Price & availability of similar products
Consumer income
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Price Elasticity of Demand (E) (Percentage)
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Percentage change in quantity demanded/Percentage change in price
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Total Revenue Equation
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P x Q
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Break-Even Analysis
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a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
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Break-Even Point (BEP) Equation
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Fixed Cost/Price-Unit Variable Cost
FC/P-UVC
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Pricing Objectives
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specifying the role of price in an organization's marketing and strategic plans
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Pricing Constraints
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Factors that limit the range of prices a firm may set
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Illegal Actions
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Price Fixing
Price Discrimination
Deceptive Pricing
Predatory Pricing
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Setting a Final Price
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Select a Price Level
Set the List/Quoted Price
Make Adjustments to this price ^
