Price Flashcards
the value paid for a product in a marketing exchange
*doesnt always take the form of money Ex: bartering
price
Importance of price to marketers?
price is the only marketing mix variable that can be changed quickly
Profit =
total revenue - total costs
or
(price x quantity sold)- total costs
Price has a psychological impact on customers…
a high price can emphasize the quality of a product
Ex: furniture
What is price in the broadest sense?
price allocates resources in a free-market economy
Emphasizing price as an issue and matching or beating competitors prices
Ex: walmart competes for pricing
*if youre going to charge low prices, you better have low costs
price competition
Emphasizing factors other than price to distinguish a product from competing brands
Ex: product requires additional costs so they cant afford to cut the price, use promotion instead
nonprice competition
-a change in price causes an opposite change in total revenue
-Consumers buy more or less of a product when the price changes
Ex: recreational vehicle
elastic demand
-a change in price results in a parallel change in total revenue
-an increase or decrease in price will not significantly affect demand
Ex: Medicine
inelastic demand
An increase in sales exactly offsets a decrease in prices, and revenue is unchanged
unitary elasticity
Factors affecting elasticity of demand
1) availability of substitutes
2)amount of income available
3)time
Ex: insulation substitutes fuel oil
Price: down
Revenue: up
demand is: elastic
Price: down
Revenue: down
demand is: inelastic
Price: up
Revenue: up
demand is: inelastic
Price: up
Revenue: down
demand is: elastic
