Price

Question 1

What is Price?

Answer 1

The amount of money charged for a product or service/The sum of value that a customer exchanges for the benefits of having the good or service.

Question 2

What kind of pricing is customer driven?

Answer 2

Value-based pricing.

Question 3

What kind of pricing is product driven?

Answer 3

Cost-based pricing

Question 4

What is the price floor?

Answer 4

No profits below this price.

Question 5

What is the price ceiling?

Answer 5

There is no demand for said product above this price.

Question 6

How is the price set?

Answer 6

Based on competitors’ prices, marketing objectives and perceived value of the product.

Question 7

What is the difference between cost based pricing and value based pricing?

Answer 7

Value based pricing meets a perceived value at a target price whereas cost based pricing needs to convince buyers of the product’s value.

Question 8

What is good value pricing?

Answer 8

Offering a combination of good quality and service at a fair price.

Question 9

What is EDLP?

Answer 9

Every Day Low Pricing is constantly charging a low price everyday with little to no price discounts.

Question 10

What is High-Low pricing?

Answer 10

Charging higher prices everyday but running promotions FREQUENTLY to lower prices temporarily.

Question 11

What is value added pricing?

Answer 11

Attaches value adding features to differentiate the company’s offer and justifying a higher price.

Question 12

What is target costing?

Answer 12

Starts with an ideal selling price based on perceived value and then aims for production costs that make sure that the final price is met.

Question 13

What is Total cost?

Answer 13

The sum of the fixed and variable costs of any level of production.

Question 14

What are fixed costs?

Answer 14

Costs that don’t vary with production or sales level such as Rent.

Question 15

What are variable costs?

Answer 15

Vary with levels of production such as Raw Materials and packaging.

Question 16

What is Cost-plus pricing?

Answer 16

Adds markup to the product determined by the cost of a unit and the desired return on sales. Ex: $10 production cost wanting a profit of $5 will lead to a final price of $15

Question 17

What is break even pricing?

Answer 17

Setting a price to break even on costs.

Question 18

What is competition based pricing?

Answer 18

Setting prices based on competitors’ strategies, costs, prices and market offerings.

Question 19

What is competition based pricing?

Answer 19

Setting prices based on competitors’ strategies, costs, prices and market offerings.

Question 20

How does Overall Marketing Strategy affect price?

Answer 20

An elevated position of overall strategy such as Tesla pushing for sustainability would create a premium in terms of price.

Question 21

How does the Marketing Mix affect price?

Answer 21

Price is affected but the other 3 Ps, coordinating with the production costs/promotion costs/placing and position.

Question 22

What are marketing objectives?

Answer 22

set of clearly defined, measurable goals established as part of a
marketing plan.

Question 23

How do markets and demand affect price?

Answer 23

A marketer must understand the relationship between the price and demand of its product.

Question 24

What is a pure competition market?

Answer 24

A lot of companies that accept the market price which is determined by supply and demand.

Question 25

What is a monopoly?

Answer 25

One seller in the market (that being a regional are) that has total control over the price.

Question 26

What is a monopolistic market?

Answer 26

Has many sellers selling different products that have a limited control over the price of those products.

Question 27

What is an Oligopoly?

Answer 27

A few sellers, wherein pricing is very competitive, and each seller sells a large portion of all the products sold in the marketplace.

Question 28

Price elasticity of demand?

Answer 28

measure of the
sensitivity of demand to changes in
price.

Question 29

What is market Skimming?

Answer 29

high initial prices to “skim” revenue
layers from the market.

Question 30

What is market penetration pricing?

Answer 30

setting a low price for a new product in
order to attract a large number of
buyers and a large market share

Question 31

Product line pricing?

Answer 31

The cost differences between products in the product line, customer evaluations of their features, and competitors’ prices.

Question 32

Optional product pricing?

Answer 32

takes into account optional or
accessory products along with the
main product.

Question 33

Captive product pricing

Answer 33

sets prices of products that must be
used along with the main product.

Question 34

By-product pricing

Answer 34

sets a price for by-products in order
to make the main product’s price
more competitive.

Question 35

Product bundle pricing

Answer 35

combines several products at a reduced price.