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Principle of marketing > chapter 13 pricing > Flashcards

chapter 13 pricing Flashcards

1
Q

def. Price

A
  • the money or other consideration, including other products and services, or time,
  • exchanged for the ownership or use of a product or a service.
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2
Q

what is the indicator if value

A

price

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3
Q

price eqn.

A

price=list price - incentives and allowances + extra fees

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4
Q

example of incentives and allowance

A

cash discount

school scholarship

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5
Q

the six steps in setting price

A
  1. identify pricing constraints and objectives
  2. estimate demand and revenue
  3. estimate cost, volume, and profit relationships
  4. select an approximate price level
  5. set list or quoted price
  6. make special adjustments to list or quoted price
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6
Q

what are the constraints and objectives

A

constrains: demand for product class and brand, newness, costs and competition
objectives: profits, market share, and survival

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7
Q

def. pricing constraints: 7 catagories

A

.1. Demand for the Product Class

  1. Newness of the Product
  2. Single Product versus a Product Line4. Cost of Producing and Marketing the Products
  3. Cost of Producing and Marketing the Product
  4. Cost of changing prices and time period
  5. Type of competitive market structure
  6. Competitors’ prices
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8
Q

def. pricing constraints: 7 categories

A

.1. Demand for the Product Class

  1. Newness of the Product
  2. Single Product versus a Product Line4. Cost of Producing and Marketing the Products
  3. Cost of Producing and Marketing the Product
  4. Cost of changing prices and time period
  5. Type of competitive market structure
  6. Competitors’ prices
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9
Q

def. pricing constraints: 7 categories

A

.1. Demand for the Product Class

  1. Newness of the Product
  2. Single Product versus a Product Line
  3. Cost of Producing and Marketing the Product
  4. Cost of changing prices and time period
  5. Type of competitive market structure
  6. Competitors’ prices
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10
Q

how does competition affects the pricing

A
  • influences the nature of product differentiation and extent of advertising;
  • in turn the latitude of price competition.
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11
Q

types of competition

A
  • pure monopoly
  • oligopoly
  • monopolistic competition
  • pure competition
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12
Q

types of competition

A
  • pure monopoly
  • oligopoly
  • monopolistic competition
  • pure competition
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13
Q

what is pure competition

A

Many local competitors

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14
Q

what is oligopoly

A

a market is shared by a few companies. The price war is very harmful

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15
Q

def. pricing constraints: 7 categories

What factors impact the list price to determine the final price?

A

.1. Demand for the Product Class

  1. Newness of the Product
  2. Single Product versus a Product Line
  3. Cost of Producing and Marketing the Product
  4. Cost of changing prices and time period
  5. Type of competitive market structure
  6. Competitors’ prices
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16
Q

monopolistic competition

A

Local and Regional non-price competitors (Ads: product features)

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17
Q

three main strategies to handle competition

A
  1. extent of price competition
  2. extent of product differentiation
  3. extent of advertising
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18
Q

what is oligopoly

A

a market is shared by a few companies. The price war is very harmful.
The sellers are sensitive to each other’s price

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19
Q

define Pricing objectives

A
  • broad objectives that specify the role of price in an organization’s marketing and strategic plans.
  • These objectives may change over time and PLC and impact pricing directly.
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20
Q

identify 5 pricing objects

A
  1. profit
  2. sales and market share
  3. unit volume and costs
  4. BE point( survival!!)
  5. social responsibility
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21
Q

How does the type of competitive market affects a firm’s latitude in setting price? (3)

A

The type of competition considerably influences the latitude of price competition and, in turn, the nature of product differentiation and extent of advertising

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22
Q

Demand curve shows ___

A

the maximum number of products that consumers will buy at a given price

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23
Q

key influential factors that impact demand (6)

A
  1. Consumer tastes
  2. Price and availability of
  3. other products (substitutes)
  4. Consumer income/budget
  5. Other factors (convenience)
  6. Initial Cost and carrying
    cost over time (Electrical Cars)
  7. Cost of disposal
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24
Q

when does a shift in the demand occur?

A

any factors influencing demand change

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25
Q

what is a movement along a demand curve?

A

when the price is lowered (increased) and quantity demanded increases (decreased), assuming that other demand factors remain unchanged.

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26
Q

when does a shift in the demand occur?

A

any of 6 factors influencing demand change

27
Q

def. elastic demand

A

Slight decrease in price will trigger a large increase in product sold.

28
Q

What does it mean if a product has inelastic demand?

A

Slight increases or decreases in price will not have much impact on quantity demanded.

29
Q

def. Total revenue

A

the total amount of money received from the sale of the product

30
Q

def. variable cost

A

Impact of volume of production (economies of scale and scope)

31
Q

importance of Break-Even analysis

A

the relationship between total revenue and total cost to determine profitability at various levels of output

32
Q

What is the difference between fixed cost and variable cost?

A

Fixed cost is the sum of the firm’s expenses that are stable and do not change with the quantity of product that is produced and sold. Variable cost is the sum of the firm’s expenses that vary directly with the quantity of product that is produced and sold.

33
Q

What is a break-even point?

A

The break-even point (BEP) is the quantity at which total revenue and total cost are equal and beyond which profit occurs.

34
Q

what is Cost-Oriented Approaches

A

the price setter stresses the supply or cost side and not the demand side of the pricing problem, not the demand side.

35
Q

Cost-Plus Pricing=

A

summing up all cost components + a mark-up

36
Q

Standard Markup Pricing =

A

adding a fixed percentage to the cost of all items in a specific product class

37
Q

Experience Curve Pricing =

A

allowing for cost reduction due to experience (10 to 30%)

38
Q

what is Profit-Oriented Approaches

A

attempt to balance both revenues and costs to set prices

39
Q

what is Profit-Oriented Approaches

A

attempt to balance both revenues and costs to set prices.

attempt to balance both revenues and costs to set prices

40
Q

what is Competition-Oriented Approaches

A

stress what competitors or “the market” is doing rather than emphasize demand, cost, or pro­fit factors

41
Q

Customary Pricing =

A

Setting price dictated by tradition

42
Q

Customary Pricing=

A

Setting price dictated by tradition

43
Q

Above- At- or Below- Market Pricing=

A

Above- At- or Below- Market Pricing

44
Q

Loss-Leader Pricing=

A

The purpose of loss-leader pricing is not to increase sales of that particular product and to attract customers in the hopes that they will buy other products as well, particularly discretionary items that carrying large markups.

45
Q

Before the final list or quoted price is set, the effects on the___, ____, and _____ must be assessed.

A

company, customers, and competitors

46
Q

what is the company effects affecting the final list or quoted price

A

impact of price-change on other products and product lines

47
Q

Product-line pricing=

A

The highest (Premium to generate profits) and lowest price (Discount to generate traffic) products should make sense to consumers.

48
Q

what is the customer effects affecting the final list or quoted price

A

customer perception of price-quality

49
Q

what is the competitive effects affecting the final list or quoted price

A

retaliations: price war– successive cutting of price

50
Q

when cutting off a price, what what should consider? (3)

A
  1. cost advantage
  2. elastic demand
  3. impact is confined to specific product and customer class
51
Q

def discount

A

reductions from list price

  • a seller gives a buyer
  • a reward for some activity of the buyer
  • that is favorable to the seller
52
Q

4 types of discount

A 
Quantity Discounts (buy more)
Seasonal Discounts (buy earlier)
Trade (Functional) Discounts (Reward for performing certain functions)
Cash Discounts (pay quickly)
53
Q

def.

A

reductions from list or quoted prices to buyers for performing some activity

ex.
Trade-In Allowances
Promotional Allowances
Allowance for every day low pricing

54
Q

To reflect the cost of transportation of the products from seller to buyer, geographical adjustments are made by______to list a quoted price

A

manufacturers or even by wholesalers

55
Q

def. FOB Origin Pricing

A

Free on Board at a named location involve loading on the transport vehicle at that location

56
Q

Uniform Delivered Pricing

A

FOB at buyer’s location

57
Q

five pricing practices which have received the most legal and regulatory scrutiny

A 
Price Fixing
Price Discrimination
Predatory Pricing
Deceptive Pricing 
Delivered Pricing
58
Q

which document of legislation addresses the five pricing practices?

A

Competition Act

59
Q

two types of pricing fixing

A

vertical and horizontal

60
Q

def. vertical price fixing

A

Vertical Agreements for re-ale price maintenance

61
Q

def. horizontal price fixing

A

Horizontal agreements to set prices

62
Q

Why would a seller choose a flexible-price policy over a one-price policy?

A

Most companies use a one-price policy. A flexible-price policy gives sellers considerable discretion in setting the final price in light of demand, cost, and competitive factors. Flexible pricing has grown in popularity because of increasingly sophisticated information technology.

63
Q

barter

A

the exchange of goods and services

Principle of marketing (14 decks)

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