CHAPTER 13 BUILDING THE PRICE FOUNDATION I NATURE AND IMPORTANCE OF PRICE a Price the money or other considerations including other goods services b exchanged for the ownership or use of a good or service Importance of Price Price is the only thing we do that isn t an expense Price is REVENUE c Barter the practice of exchanging goods and services for other goods and services rather than money d Price Equation Final Price List Price Incentives Allowances Extra Fees II Price as a indicator of value a Value the ratio of perceived benefits to price b Value Perceived Benefits Price c d Value Pricing practice of simultaneously increasing product and service benefits Price cannot exceed the perceived value of the attributes being offered while maintaining or decreasing price i But what happens if when costs rise e Value Pricing is not necessarily inexpensive i PCs have seen collapsing prices as competition has become strong ii Low Prices PCs are the fastest growing segment iii Solutions adding features and services that add value III Price in the Marketing Mix a Profit Equation Profit Total Revenue Total Cost b Unit Price x Q Sold Fixed Cost Variable Cost IV Six Steps in Setting Price 1 Identify Pricing Objectives and Constraints a Pricing Objectives specify the role of price in an organization s marketing and strategic plans b Profit Objectives i Managing for Long Run Profits ii Managing for Current Profit iii Target Return Return on Investment c Pricing Objectives i Sales ii Market Share or iii Unit Volume iv Survival v Social Responsibility d Pricing Restraints Caused By i Demand for 1 Product Class ex Cars 2 Product ex Sports Cars 3 Brand ex Bugatti ii Newness of the Product Product Life Cycle Stage Single Product vs a Product Line ex Yoplait Cost of Producing and Marketing a Product e f g Cost of Changing Prices and Time Period They Apply h Type of Competitive Market i Pure Competition ii Monopolistic Competition iii Oligopoly iv Pure Monopoly i Competitors Prices 2 Estimate Demand and Revenue a The Demand Curve graph showing relationship between price of a product and quantity sold at that price Show max number of units that will be sold at a given price b Demand Curve Influenced By i Consumer Tastes ii Price Availability of Similar Products iii Consumer Income c Demand Factors Factors that determine consumers willingness and ability to pay for goods services d Total Revenue Total money received from the sale of a product e Average Revenue average amount of money received for selling one unit f Marginal Revenue change in total revenue resulting from producing and of product AKA Price marketing one additional unit
View Full Document
Unlocking...