week 6 Flashcards
What is the only marketing mix variable that can be changed quickly?
price
What is price related to?
total revenue and profit
What is price?
the assignment of value, or the amount the consumer must exchange to receive the offering
What does price include?
money, effort, time, favors, votes, or anything else that has value to the other party
What is inelastic demand?
a change in price results in a little or no change in quantity demanded
What is elastic demand?
a change in price causes a great(opposite) change in quantity demanded
What are fixed costs?
costs that dont change with the number of units produced (be that 100 or 10,000)
What happens as to fixed costs as units produced increases?
the average cost per unit will always decrease
What are variable costs?
production costs that are tied to the number of units produced and thus vary depending on volume
What goes into variable costs?
cost of raw materials, credit card fees, piece rate labor, sales commissions, delivery expenses
What goes into fixed costs?
rent, mortgage payment, insurance, computers, salary of full-time workers, advertising
What is Break-Even Point?
the point at which the costs of producing a product is equal to the revenue made from selling the product
What is contribution margin?
difference between total revenue and total variable costs
What is contribution unit margin?
price - variable costs
What does the importance of price depend on?
type of product, type of target market, and purchase situation
What is cost based pricing?
calculate price based on company’s costs
What is competitive based pricing?
benchmarking on competitor’s prices
What is demand based pricing?
setting a price based on what consumers are willing to pay
Wha is dynamic pricing?
the practice of varying the price for a product or service to reflect changing market conditions
What is captive pricing?
pricing strategy where the price of one product is tied to the price of another product
What is price skimming?
a firm charges the highest initial price that customers will pay and then lowers it over time
What is penetration pricing?
a marketing strategy implemented to draw customers to a new product or service
What is trial pricing?
allows prospective customers to try your product or service for a limited time, usually for free or for a small fee
What is anchoring?
influences how buyers perceive advertisements
What is buyers’ expectations?
The expectations that buyers have concerning the future price of a good, which is assumed constant when a demand curve is constructed
What is internal reference prices?
the price point that a customer expects to pay for a product or service, shaped by their past experiences and purchasing history
What is odd-even pricing?
a popular psychological marketing technique that involves pricing items with an odd or even ending, such as $0.99 or $1.00
What is price lining strategy?
selling different products at different price points to cater to customers who are looking for different levels of quality, convenience, and value
What is prestige pricing?
a pricing strategy in which prices are set at a high level, buyers will associate a high price for the product with superior quality
What is loss-leader pricing?
prices a product lower than its production cost in order to attract customers or sell other, more expensive products
What is predatory pricing?
the illegal business practice of setting prices extremely low in an attempt to eliminate the competition and establish a monopoly
What is bait and switch pricing?
advertising an item at an unrealistically low price as ‘bait’ to lure customers to a store or selling place and then attempting to steer them to a higher-priced item
