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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 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
Value Based upon Perceived Satisfaction
Reasonable Price = Perceived Reasonable Value
Exchange based on expectation of satisfaction
The price charged to customers multiplied by the number of units sold.
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
1. price oriented
2. sales oriented
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.
Setting prices so that total revenue is as large as possible relative to total costs.
Return on Investment
ROI = Net Profit after taxes
Sales-Oriented Pricing Objectives
A company's product sales as a percentage of total sales for that industry.
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
N. Gregory Mankiw
Economics: Concepts and Choices
Economics: Principles in Action
Arthur O'Sullivan, Steven M. Sheffrin
Principles of Economics
N. Gregory Mankiw
Sets with similar terms
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