Marketing - exam 3 study guide FINAL

Marketing - exam 3 study guide FINAL - Marketing Review...

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Marketing Review Sheet Exam 3 Chapter 12 Price- the money or other considerations exchanged for the ownership or use of a good or service. Price equation Final Price= list price – (incentives + allowances) + extra fees Incentives - rebates, etc. Allowances - trade-in value, etc. Profit equation- Profit= total revenue-total cost = (unit price x quantity sold) – total cost Demand-Oriented approaches to pricing Skimming Pricing- setting the highest initial price that customers really desiring the product are willing to pay. Not price sensitive customers. Penetration pricing - setting a low initial price to appeal to the masses, and discourage competition. Prestige Pricing - setting a high price so that quality- or status-conscious customersw ill be attracted. Sometimes works like lowering prices, in getting more people to buy it. Odd-even pricing- 99 cents instead of $1.00. Get people to think that $599 is “500 some dollars” rather than $600. Target pricing - Manufacturers thinking about how much the ultimate consumer would pay for a product, and then work backwards through markups taken by retailers and wholesalers to determine what price they can charge wholesalers for the product. Then the manufacturer might adjust the composition and features of a product to achieve the target price. Bundle Pricing- the marketing of two or more products in a single package price. Like Delta offering airfare, car rental and lodging vacation packages. Yield Management Pricing - the charging of different prices to maximize revenue for a set amount of capacity at a given time. Cost-oriented approaches to pricing Standard marking pricing- adding a fixed percentage to the cost of all items in a specific product class. 1
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Cost-plus pricing - summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price. Profit-oriented approaches Target profit pricing- When a firm sets an annual target of a specific dollar volume of profit. Use the profit equation. Profit = total revenue-total cost Price/item = profit + [(cost/picture x pictures sold) + overhead cost]/pictures sold Target return-on-sales pricing- when firms set prices that will give them a profit that is a specified percentage of the sales volume. Target return-on-investment pricing - firms (often public utilities) set prices to achieve a ROI target such as a percentage that is mandated by its board of directors. So if equipment costs $50 billion, it would need to set the price of the good to customers at a level that results in $5 billion a year in profits. Competition-oriented approaches Customary Pricing- Often for products where tradition, a standardized chanel of distribution, or other competitive factors dictate the price. Ex: A candy bar in a vending machine has always been 75 cents.
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Marketing - exam 3 study guide FINAL - Marketing Review...

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