Unit 9- Price

Question 0

what are the steps in price planning?

Answer 0

1. develop pricing objectives
2. estimate demand
3. determine costs
4. evaluate the pricing environment
5. choose a pricing strategy
6. develop pricing tactics

Question 1

what is price?

Answer 1

the assignment of value, or the amount the consumer is willing to exchange to receive the offering
-only element in the 4ps=revenues
most flexible/most complicated

Question 2

what is demand? (estimate demand)

Answer 2

customers desires for a product + the resources to obtain it

Question 3

what is the law of demand?

Answer 3

as price goes up, quantity demanded goes down

Question 4

what are fixed costs?

Answer 4

costs of production that don’t change with number of units produced

Question 5

what are variable costs

Answer 5

costs of production that are tied to & vary depending on the number of units produced

Question 6

what are pricing strategies based on cost?

Answer 6

simple to calculate & risk free

cost plus pricing

Question 7

what is cost-plus pricing

Answer 7

total all product costs & add markup

Question 8

what are pricing strategies based on demand?

Answer 8

based on estimate of quantity a firm can sell at different prices

Question 9

what is target costing?

Answer 9

identify quality & functionality customers need & price they’re willing to pay before designing product

Question 10

what is yield management pricing?

Answer 10

charge different prices to different customers to manage capacity

Question 11

what pricing strategies based on customers needs?

Answer 11

value pricing or everday low pricing

Question 12

what are everday low pricing (EDLP)

Answer 12

pricing strategy in which a firm sets prices that provide ultimate value to customers

Question 13

what are pricing strategies based on the competition?

Answer 13

pricing near, at, above, or below the competition

Question 14

what’s skimming price?

Answer 14

a very high premium price (important benefits, little chance for competitors to react fast, several customer segments w/different levels of sensitivity)

Question 15

what is market-penetration pricing?

Answer 15

a very low price to encourage more customers to purchase

Question 16

what is trial pricing?

Answer 16

low price for a limited period of time

Question 17

what is two-part pricing? (individual)

Answer 17

offering 2 separate types of payments to purchase the product
ex/ device + cell plans

Question 18

what are payment pricing? (indvidual)

Answer 18

breaking total price into smaller amounts payable over time

Question 19

what is price bundling (multiple)

Answer 19

selling 2 or more goods or services as a single package for one price

Question 20

what is captive pricing?

Answer 20

pricing two products that work only when used together

Question 21

what are the advantages for companies using dynamic pricing strategies

Answer 21

cost of changing prices on internet is practically zero

firms can respond quickly & frequently to changes in costs, supply & demand

Question 22

what are the advantages for consumers for dynamic pricing strategies

Answer 22

consumers gain control/more negotiating power

search engines & shop bots make customers more price senstive

Question 23

what is the break even concept?

Answer 23

point where your sales revenues covers both variable & fixed costs
(no net loss or gain)

Question 24

what are variable costs

Answer 24

costs directly associated w/the manufacture or wholesale purchase of a product

Question 25

what are fixed costs

Answer 25

monthly expenses regardless of the level of production or sales

Question 26

what is targeted return on investment (ROI)

Answer 26

The profit an organization hopes to make given the amount of assets, or money, it has tied up in a product

Question 27

what is maximizing profits?

Answer 27

set prices to increase revenues as much as possible, relative to costs

Question 28

what are maximizing sales?

Answer 28

pricing products to generate as much revenue as possible, regardless of what it does to a firms profits

Question 29

what is maximizing market share

Answer 29

set prices allows capturing a larger share of the sales

Question 30

what is maintaing the status quo?

Answer 30

meet or equal competitors prices

Question 31

what is breakeven points (BEP)

Answer 31

the point where total costs equal total revenue