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Marketing Management > Chapter 7_Pricing > Flashcards

Chapter 7_Pricing Flashcards

1
Q

What is the pricing?

A

Valued placed on that which is an exchange

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2
Q

What are the internal factors need to be considered as setting the price

A
  1. Marketing objective (survival, current profit max, market share, product quality
  2. Marketing mix strategy, the strategy must match your product
  3. Cost, including fixed variable(labour cost), total marginal (cost produce one unit)
  4. organization consideration
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3
Q

Cost Curve

A

Cumulative production goes up, cost per unit go down

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4
Q

What are the external factors that need to be considered as setting the price?

A
  1. Pricing in different markets
  2. Consumer perceptions of price and value.3
  3. Price e
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5
Q

what is the reference price?

A

The price you set based on these factors:
• Fair price (what consumers feel the product should cost)
• Typical price
• Lastpricepaid
• Upper bound price (max consumer would pay)
• Lower bound price (minimum consumer would pay)
• Historicalcompetitorprices
• Expected future price
• Usualdiscountedprice

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6
Q

inelastic demand and elastic demand

A

Inelastic demand: price down, revenue down (table salt)

Elastic demand: price down, revenue up.(black Friday stuff)

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7
Q

What thing can shift the demand curve?

A

Promotion and other non-price variables wil shift the demand curve

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8
Q

How to determine if a product is price elastic or inelastic demand?

A

calculate value of “e”:
P1 = $10, Q1 = 100 Units; P1 X Q 1 = $1000 (Revenue)
P2 = $5, Q2 = 150 Units; P2 X Q2 = $750 (Revenue)
if P1Q1 more than P2Q2, then the product is price inelastic.

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9
Q

What are the effects on total revenue of price for elasticity?

A

if e>-1, then inelastic, revenue will go down as total price go down.
if e

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10
Q

How to estimate elasticity of product?

A

Statistic method (check selling and profit data, conduct regression analysis)
Experimentation includes field and laboratory (manipulate the price, see the effect)(pay people to shop, see the effect)
Direct consumer questioning (survey)
Judgmental Estimates (ask experts)

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11
Q

If has few/no consumers, what is the elasticity of price?

A

Product becomes inelastic

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12
Q

If buyers do not readily notice higher price, what is the elasticity of price?

A

Product becomes inelastic

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13
Q

If buyers are slow to change buying habits & lower prices

A

Product becomes inelastic

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14
Q

Buyers think higher prices are justified by improvements, normal inflation

A

Product becomes inelastic

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15
Q

Law factors that inllegal for price setting

A

Price Fixing (agreement of price with big business)
• Resale Price Maintenance (have to set MSRP)
• Price Discrimination (expensive for the small retailer )
• Minimum Pricing (determined by cost, lowering price to undermine the competition, that’s illegal)
• Price Increases (as long as consumer willing to pay, there is price ceiling)

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16
Q

What is deceptive pricing?

A

Double the price and put the sale sign on product is illegal. selling price must be lower than its original price.
Complain to Federal trade commission.

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17
Q

Mark up price

A

The selling price composes of cost price and mark up price.

18
Q

How to calculate mark up price on cost price

A

markup price/cost price *100

19
Q

How to calculate mark up price on selling price

A

markup price/selling price *100

20
Q

Which mark up price that distributor refer to?

A

Markup on selling price

21
Q

How to calculate breakeven number?

A

Number of units being sold (breakeven number)=fixed costs/(price per unit - average variable cost/unit)

22
Q

What is contribution margin?

A

price per unit - average variable cost/unit

23
Q

How to calculate target profit we have?

A

Number of units being sold (profitable number)=fixed costs+target profit/(price per unit - average variable cost/unit)

24
Q

What are four Product Mix Pricing Strategies

A
  • Product-Line Pricing （同类价格互相竞争）
  • Optional Product Pricing （optional equipment for car)
  • Captive Product Pricing (fusion blades for sell, handle is free) 剃须刀跟墨盒是captive product
  • By-Product Pricing (providing substitue of main product)
25
Q

What is Price Adjustment Strategies

A 
Cash Discounts (2.10.net 30) 10天内支付有2% discount
Quantity Discounts
Trade Discounts
Seasonal Discounts
Allowances
26
Q

What is cash discounts?

A

Pay within 10 days will get 2% discount

27
Q

What are the two types of quantity discounts?

A

Cumulative and non-cumulative discount
Cumulative discount means the more you buy, the lower price per unit you get.
Non-cumulative discount means get 10 and one free.

28
Q

What is odd-even pricing

A

psychological pricing (4.99 instead of 5)

29
Q

What is customary pricing?

A

Different price based on location

30
Q

What is prestige price

A

higher price, more sell （奢侈品）

31
Q

What is pricing lining

A

Ten brands shirt have different prices instead of ten prices shirts

32
Q

Difference between F.O.B original price and F.O.B destination price.

A

Including shipping for destination price (same as freight absorption pricing)

33
Q

What are six geograhic pricing?

A 
F.O.B. Origin Pricing
• F.O.B. Destination Pricing
• Uniform Geographic Pricing
• Zone Pricing
• Base-Point Pricing
• Freight Absorption Pricing
34
Q

What is uniform geographic price?

A

Same price for everywhere. (Mcdonald’s)

35
Q

What is zone pricing?

A

Different zone has different pricing

36
Q

What is base point price?

A

Charging the price base on the nearest base point of city.

37
Q

What are three new product pricing？

A
  • Skimming Pricing
  • Penetration Pricing
  • Target Pricing
38
Q

How tax determines transfer pricing?

A

if tax is high, the profit will be set as low and the price will be very high.
If tax is low, the profit will be set as high and price will be very low.

39
Q

Intra-corporateexchanges

A

– Cost-based transfer pricing
– Market-based transfer pricing
– Negotiated transfer pricing

40
Q

NIFO

A

“next in first out”

where the cost of a particular item is based upon the cost to replace the item rather than on its original cost

Marketing Management (11 decks)

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