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Description
Flashcards by kitty.1706, updated more than 1 year ago
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Created by kitty.1706
about 13 years ago
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| Question | Answer |
| Factors affecting pricing decisions: Internal Factors | Marketing Objectives, Marketing Mix, Cost, Organisational Set Up |
| Factors affecting pricing decisions: External Factors | Marketing and Demand, Competition, Other environmental factors |
| Identify Pricing Objectives | Pricing objectives specify the role of price in an organisation’s marketing and strategic plans. |
| Pricing constraints include | Demand for the Product Class, Product and Brand, Newness of the Product: Stage in the Product Life Cycle, Cost of Producing and Marketing the Product, Competitors’ Prices, Legal and Ethical Considerations |
| A key to a marketing manager’s setting a final price for a product is to find an ‘approximate price level’ to use as a reasonable starting point. Four common approaches to helping find this approximate price level are | 1. demand-oriented. 2. cost-oriented. 3. profit-oriented. 4. competition-oriented approaches. |
| Cost-Oriented Approaches | Standard Mark-up Pricing, Cost-Plus Pricing |
| Cost-Oriented Pricing | Set price based on total cost of the unit plus desired profit, Adding a standard mark-up to the cost of the product |
| Demand-Oriented Approaches do what? | they emphasise factors underlying expected customer tastes and preferences more than such factors as cost, profit and competition when selecting a price level. |
| Demand oriented approaches used in pricing are | Price Skimming, Penetration Pricing, Prestige Pricing, Odd-Even Pricing, Bundle Pricing, Economic Value Pricing |
| Profit Oriented approaches do what? | A price setter may choose to balance both revenues and costs to set price using profit oriented approaches. |
| Pricing methods used with this approach are | • Target Profit Pricing (e.g annual profit of $10000 is sought at an annual volume of 1000 units) • Target Return-on-Sales Pricing (e.g. 20% return on sales at annual volume of 1000 units) • Target Return-on-Investment Pricing ( 10% return on investment) |
| Competition-Oriented Approaches do what? | Rather than emphasise demand, cost or profit factors, a price setter can stress what competitors or ‘the market’ is doing. |
| Competition-Oriented Approaches methods are | • Customary Pricing • Above-, At- or Below-Market Pricing • Loss-Leader Pricing • Sealed bid • Going rate |
| 3 steps to set a final price? | Select an Approximate price level, Set the list or quoted price, Make special adjustments to the list or quoted price |
| What is the demand curve? | A demand curve shows the number of products that will be sold at a given price. But price is not the complete story in estimating demand. |
| What is the total revenue? | Total Revenue: The total money received from the sales of the product. |
| Cost Concepts are? | Total Cost (TC) - The total expense. Fixed Cost (FC) - The expense of the firm which does not change. (ex. rent) Variable Cost (VC) - The expense which varies depending on the quantity of the product. |
| What is the Break-even analysis | Break-even analysis is a technique that analyses the relationship between total revenue and total cost to determine profitability at various levels of output. |
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