chapter 9 Flashcards
increasing product or service benfits while maintaining or decreasing price
value pricing
profit equation
total revenue-total cost
= (unit price x quantity sold)- total cost
demand oriented approaches include
skimming, penetration, yield management
skimming pricing
-high inital price for new products customers are willing to pay
penetration pricing
-low inital price for new products
-customers are price sensitive
prestige pricing
high price so quality or status consumers are attracted (rolls royce)
odd-even pricing
setting price a few dollars/cents under an even number
bundle pricing
marketing of two or more products in a single package
the simplest pricing method
cost-plus pricing (adding a markup to the cost of the product).
unit cost =
VC + (FC/ unit sales)
setting prices based on the costs for producing, distributing and selling the product plus a fair rate of return for its effort and risk.
cost-oriented pricing approach
elastic demand
Inelastic demand
-a slight change in price
-large change in quantity demanded
-slight changes do not affect the demand
TR=
unit price x quantity sold
dumping
the firm sells a product in a foreign country below domestic price
grey market
products are sold through unauthorized channels
