Price Flashcards
What is Price?
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.
What kind of pricing is customer driven?
Value-based pricing.
What kind of pricing is product driven?
Cost-based pricing
What is the price floor?
No profits below this price.
What is the price ceiling?
There is no demand for said product above this price.
How is the price set?
Based on competitors’ prices, marketing objectives and perceived value of the product.
What is the difference between cost based pricing and value based pricing?
Value based pricing meets a perceived value at a target price whereas cost based pricing needs to convince buyers of the product’s value.
What is good value pricing?
Offering a combination of good quality and service at a fair price.
What is EDLP?
Every Day Low Pricing is constantly charging a low price everyday with little to no price discounts.
What is High-Low pricing?
Charging higher prices everyday but running promotions FREQUENTLY to lower prices temporarily.
What is value added pricing?
Attaches value adding features to differentiate the company’s offer and justifying a higher price.
What is target costing?
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.
What is Total cost?
The sum of the fixed and variable costs of any level of production.
What are fixed costs?
Costs that don’t vary with production or sales level such as Rent.
What are variable costs?
Vary with levels of production such as Raw Materials and packaging.
What is Cost-plus pricing?
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
What is break even pricing?
Setting a price to break even on costs.
What is competition based pricing?
Setting prices based on competitors’ strategies, costs, prices and market offerings.
What is competition based pricing?
Setting prices based on competitors’ strategies, costs, prices and market offerings.
How does Overall Marketing Strategy affect price?
An elevated position of overall strategy such as Tesla pushing for sustainability would create a premium in terms of price.
How does the Marketing Mix affect price?
Price is affected but the other 3 Ps, coordinating with the production costs/promotion costs/placing and position.
What are marketing objectives?
set of clearly defined, measurable goals established as part of a
marketing plan.
How do markets and demand affect price?
A marketer must understand the relationship between the price and demand of its product.
What is a pure competition market?
A lot of companies that accept the market price which is determined by supply and demand.
