MARK 3321 1st Edition Lecture 12 Outline of Last Lecture I Nonprofit Organization Marketing II Target Markers for Nonprofits III Marketing Channels IV Specialization and Division of Labor V Channel Intermediaries VI Channel Functions performed by Intermediaries VII Making Channel Strategy Decisions VIII Types of Channel Relationships IX Channel Power Control and Leadership X Channel Conflict and Partnering XI Classification of Ownership XII Non store Retailing XIII Retail Marketing Strategy Outline of Current Lecture I Price II Importance of Price to Marketing Managers III Pricing Objectives IV Demand Determinant of Price V Factors that affect elasticity of demand VI Yield Management Systems VII The Cost Determinant of Price VIII The Break Even Point Current Lecture CH 19 Pricing Concepts What is Price o Price is that which is given up in an exchange to acquire a good or service The importance of price to marketing managers o Revenue The price charged to customers multiplied by the number of units sold Price x quantity These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute o Profit Revenue minus expenses Pricing objectives o Profit oriented Profit maximization Satisfactory profits Target return on investment ROI net profits after taxes total assets o o Sales oriented o ROI 550 000 4 500 000 12 2 Market share Can be based on revenue or units Based on the industry you re competing it To calculate it you need the size of industry Sales maximization Status quo The demand determinant of price o Demand o Supply o The quantity of a product that will be offered to the market by a supplier at various prices for a specified period Price equilibrium o The quantity of a product that will be sold in the market at various prices for a specified period The priced at which demand and supply are equal Elasticity of demand Consumers responsive or sensitivity to changes in price Factors that affect elasticity of demand o o Availability of substitutes When many substitutes are available it is easy to switch products making demand elastic The same is true in reverse if no substitutes are available Price relative to purchasing power o Product durability o Repairing durable products rather than replacing them prolongs their useful life If the cost of a new product increases people might elect to repair the old product Thus people are sensitive to the price increase and the demand is elastic A product s other uses o If a price is so low that it is an inconsequential part of an individual s budget demand will be inelastic and people are not sensitive to the price increase The greater the number of uses for a product the more elastic demand tends to be If a product has only one use the quantity purchased probably will not vary as price varies Rate of inflation Yield management systems o A technique for adjusting prices that use complex mathematical software to profitably fill unused capacity The cost determinant of price o Types of costs Variable costs Fixed costs Varies with changes in level of output The Break even Point Do not change as level of output changes