Chapter 20 Pricing Concepts 1 Price 2 Price Competition The value paid for a product in a marketing exchange Emphasizing price as an issue and matching or beating competitors prices 3 Nonprice Competition from competing brands 4 The Demand Curve Emphasizing factors other than price to distinguish a product A graph of the quantity of products expected to be sold at various prices if other factors remain constant 5 Elastic Demand A change in price causes an opposite change in total revenue An increase in price will decrease total revenue A change in price results in a change in the same direction as An increase in price will increase total revenue Examines what happens to a firm s costs and revenues when 6 Inelastic Demand total revenue 7 Marginal Analysis production change by one unit 8 Break Even Point in units revenue made from selling the product The point at which the costs of producing a product equal the FC CM per unit CM per unit Price Avg VC Develops in buyer s mind through experience with product 9 Internal Reference Price 10 External Reference Price 11 Quantity Discount A comparison price provided by others A reduction from list price that reflects the economies of Cumulative purchasing in large quantities Non Cumulative o Aggregated over a stated time period o Onetime price reductions are based on the number of units purchased the dollar value of the order or the product mix purchased A reduction given to buyers for prompt payment or cash 12 Cash Discounts payment 13 Seasonal Discount Price reduction given to buyers for purchasing goods or services out of season
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