Marketing Ch.13 Flashcards
Value
the ration of precieved benifits to price or value=benifits/price
value pricing
the practice of simultaneously increasing product and service benefits while maintaining or decreasing price
profit equation
profit=total revenue-total cost = (unit price*quantity sold)+(fixed cost + variable cost)
Pricing objectives
specifying the role of price in an organizations marketing and strategic plans
pricing constraints
the factors that limit the range of prices a firm may set
demand curve
graph relating the quantity sold and price
demand factors
factors that determine consumer’s willingness and ability to pay for products and services
Total Revenue(TR)
TR=P*Q
P=unit price
Q=quantity sold
Total money recieved from the sale of a product
Average Revenue
is the average amount of money received for selling one unit of a product, or simply the price of that unit. Average revenue is the total revenue divided by the quantity sold:
AR=(TR)/Q = P
Marginal Revenue(MR)
is the change in total revenue that results from producing and marketing one additional unit of a product
MR=(change in TR)/(1 unit increase in Q)=(deltaTR/deltaQ)= slope of TR curve
Price Elasticity of Demand-
percent change in quantity demand relative to a percent change in price
(% change in quantity demanded)/(% change in price)
Elastic Demand
when a 1 percent decrease in price produces more than a 1% increase in quantity demanded (increasing sales revenue)
Inelastic Demand-
exists when a 1 percent decrease in price produces less than a 1% increase in quantity demanded (decreasing sales revenue)
Unitary Demand-
exists when the % change is identical
more substitues
more price elastic