Upgrade to remove ads
Only $35.99/year

Mkt ch 19

Terms in this set (50)

The Importance of Price
Price means one thing to the consumer and another to the seller. To the consumer, the price is the cost of something; to the seller, price is the source of profits. Marketing mangers find the task of setting prices a challenge
Price
Price is that which is given up in an exchange to acquire a good or service.
What is Price?
Sacrifice Effect of Price
What is sacrificed to get a good or service
Money, Time, Dignity
Information Effect of Price
Infer quality information based on price
Higher quality = higher price
Convey status
Value Based upon Perceived Satisfaction
Reasonable Price = Perceived Reasonable Value
Exchange based on expectation of satisfaction
Revenue
The price charged to customers multiplied by the number of units sold.
Profit
Revenue minus expenses
Trends Influencing Price
1. Flood of new products
2. Increased availability of bargain priced private and generic brands
3. price cutting as a strategy to maintain or regain market share
4. internet used for comparison shopping
5. US recession from late 2007 to 2009
Pricing Objectives
1. price oriented
2. sales oriented
3.status quo

Pricing objectives must be specific, attainable, and measurable to survive in today's competitive market.
Profit-oriented pricing objectives
profit maximization, satisfactory profits, and target return on investment.
Profit Maximization
Setting prices so that total revenue is as large as possible relative to total costs.
Return on Investment
(ROI)
ROI = Net Profit after taxes
Total assets
Sales-Oriented Pricing Objectives
market share
sales maximization
Market Share
A company's product sales as a percentage of total sales for that industry.
Sales Maximization
Short-term objective to maximize sales
Ignores profits, competition, and the marketing environment
May be used to sell off excess inventory
Status quo pricing
seeks to maintain existing prices or to meet the competition's prices.
The price set for products depend on two factors:
he demand for the good and the cost to the seller for that good.
Recommended textbook explanations

Principles of Economics

7th EditionN. Gregory Mankiw
811 explanations

Economics: Concepts and Choices

1st EditionMCDOUGAL LITTEL
868 explanations

Economics: Principles in Action

3rd EditionArthur O'Sullivan, Steven M. Sheffrin
831 explanations

Principles of Economics

5th EditionN. Gregory Mankiw
506 explanations