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Marketing - Using the Marketing Mix: Price
Using the Marketing Mix: Price
Terms in this set (11)
Cost-plus Pricing calculation
cost of product/service + mark up = price
is a range of pricing tools used to achieve long-term aims.
is a range of pricing tools used over a short period of time to achieve short term objectives.
is a pricing strategy aimed at gaining market share via a low entry price.
occurs when a high initial price is set for a product when it enters the market and the price is reduced later.
Cost Plus Pricing
is a pricing method where a % or amount of profit it added to the unit costs.
Price Elasticity of Demand (PED) calculation
% change in demand
% change in price
Key Points About PED
1. The PED calculation is not a %
2. Only the value matters (not the sign)*. For example, if PED= -1.4 comment of 1.4 as a value and whether it is above or below 1.
3. Demand is price elastic is the PED has value more than 1
4. Demand is price inelastic if the PED has value less than 1
*PED usually has a negative sign because an increase in price (=) usually reduces the quantity demanded (-) and vice versa. Therefore, to assess the value of the elasticity, ignore the sign e.g. -2 and +2 both have the value of 2.
Price Elasticity of Demand
measures the sensitivity of demand to a change in price.
means that the demand for a product is sensitive to changes in price. The percentage change in quantity is greater than the percentage change in price.
means that the demand for a product is not very sensitive to changes in price. The percentage change in quantity is less than the percentage change in price.
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