Exam 2 : CH. 11

Question 1

Price

Answer 1

money used in transaction (can take different forms)

Question 2

Price Equation

Answer 2

price= List Price - Incentives or Allowances + XTRA Fees

Question 3

Barter

Answer 3

Exchange good or services

Question 4

Value

Answer 4

ratio of benefits to price: value= Benefits/Price

Question 5

Demand-oriented approaches

Answer 5

Skimming pricing
Penetration Pricing
Prestige pricing
Oddeven 
Target
Bundle
Yield management

Question 6

Skimming pricing

Answer 6

setting highest initial price

Question 7

penetration pricing

Answer 7

setting a low initial price

Question 8

prestige pricing

Answer 8

setting a high price so quality or “status” conscious consumers will be attracted

Question 9

odd-even pricing

Answer 9

involves setting prices a few dollars or cents under an even number

Question 10

Target pricing

Answer 10

1. est a price consumers will pay.
2. working through markups taking by retailers.
3. deliberately adjusting the features of the product to achieve target price

Question 11

Bundle pricing

Answer 11

marketing of TWO or more products in single package

Question 12

Yield Management pricing

Answer 12

charging different prices to maximize revenue for a set amount

Question 13

Cost Oriented pricing

Answer 13

Standard markup

Cost-plus

Question 14

Standard Markup

Answer 14

adding fixed % to the cost of all items

Question 15

Cost-Plus Standard Pricing

Answer 15

summing total unit cost + a specific amount to the cost

Question 16

Profit Oriented Pricing

Answer 16

Target Profit Pricing
Target Return-on-sales
Target Return-on-investment

Question 17

Target Profit Pricing

Answer 17

set an annual target of a specific dollar volume

Question 18

Target Return-on-Sales Pricing

Answer 18

set a price to achieve a profit that is a specified % of the sales

Question 19

Target Return-on-Investment

Answer 19

set a price to achieve an annual ROI

Question 20

Competition Oriented Pricing

Answer 20

• Above at or below market pricing

- Loss leader pricing

Question 21

Above at or below market pricing

Answer 21

setting the market price based on a “feel” for competitors prices

Question 22

Loss-Leader pricing

Answer 22

selling a product below its price to attract customers

Question 23

Demand Curve

Answer 23

graph relating quantity sold and price

Question 24

Demand Factors

Answer 24

1. Consumer Tastes
2. Price and Availability
3. Consumer Income

Question 25

Price Elasticity of Demand

Answer 25

``` Elastic = +1% Inelastic = -1% ```

Question 26

Total Revenue Equation

Answer 26

TR= Price x Quantity

Question 27

Total Cost

Answer 27

total expense incurred (sum of fixed and variable)

Question 28

Fixed Cost

Answer 28

business costs: rent, constant no matter what good/service

Question 29

Variable Cost

Answer 29

sum of expenses of the firm that vary directly with the quantity of a product that is produced (i.e. DL and DM)

Question 30

Unit variable cost

Answer 30

UVC= VC/Q

Question 31

Break Even Analysis

Answer 31

a technique that analyzes the relationship btwn total revenue and TC

Question 32

Pricing Objectives

Answer 32

specify the role of price in an organization's marketing and strategic plans. (Profit, sales rev., market share, unit volume, survival, social response)

Question 33

Pricing Constraints

Answer 33

factors that limit the range of prices a firm may set. | Demand for the product class, Newness of the product, Cost of producing, competitors prices

Question 34

Break Even Point

Answer 34

=FC/(Unit price-Unit VC)