marketing test 4 - Price overall sacrifice consumer willing to make to acquire specific product\/service the only element of marketing mix that doesnt

marketing test 4 - Price overall sacrifice consumer willing...

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Price: overall sacrifice consumer willing to make to acquire specific product /service –the only element of marketing mix that doesn’t generate costs, generates revenue Five Cs of pricing: Competition, Costs, Company objectives, customers, channel members Company objectives: pricing should support & allow the firm to reach its overall goals o Profit orientation: company objective can be implemented by focusing on target profit pricing, max profits, target return pricing o Target profit pricing: a pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit o Maximizing profits: a profit strategy that relies primarily on economic theory, if a firm can accurately specify a math model that captures all factors required to explain & predict sales & profits, it should be able to identify price at which profits are maximized o Target return pricing: a pricing strategy implemented by firms less concerned w/ the absolute level of profits & more interested in the rate @ which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as % of sales o Sales orientation: company objective based on the belief that increasing sales will help firm more than will increasing profits; firms believe that market share better reflects their success relative to market conditions than do sales alone; set low prices to discourage new firms from entering, encourage current firms to leave market &/or take market share away from competitors o Premium pricing: a competitor-based pricing model by which the firm deliberately prices a product above the prices set for competing products to capture those consumers who always shop for the best or for whom price doesn’t matter o Competitor orientation: company objective based on premise that firm should measure itself primarily against its competition o Competitive parity: a firms strategy setting prices that are similar to those of major competitors o Status quo pricing: a competitor-oriented strategy in which a firm changes prices only to meet those of competition o Customer orientation: company obj based on premise that firm should measure itself primarily according whether meets customers’ needs; most effective pricing strategy Customers: demand curve: shows how many units of a product/service consumers will demand during a specific time @ diff prices o Prestige products/services: those that consumers purchase for status rather than functionality o Price elasticity of demand: measures how changes in a price affect the quantity of the product demanded; specifically, the ratio of the percentage change in quantity demanded to the percentage change in price (elastic < -1; inelastic > -1) o Elastic: market for product/service- price sensitive; relatively small changes in price will generate large changes in quant demanded o Inelastic:
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