Marketing Notes-chapt 13

Marketing Notes-chapt 13 - Chapter 13 What is Price PRICE...

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Chapter 13 What is Price? PRICE : the money or other considerations exchanged for the ownership or use of a good or service BARTER : the practice of exchanging goods and services for other goods and services rather than for money Price Equation : Price= List price - Incentives and Allowances + Extra Fees Price as an Indicator of Value Value = Perceived Benefits Price VALUE PRICING : the practice of simultaneously increasing product and service benefits while maintaining or decreasing price *”the higher the price, the higher the quality” Price in the Marketing Mix PROFIT EQUATION : Profit = Total revenue Total Cost = (Unit Price x Quantity Sold) - Total Cost - pricing decisions influence both total revenue (sales) and total cost which make it one of the most important marketing decisions for marketing executives Steps in Setting Price 1. Identifying pricing objectives and constraints 2. Estimate demand and revenue 3. Determine cost, volume, and profit relationships 4. Select an approximate price level 5. Set list or quoted price 6. Makes special adjustments to list or quoted price
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Constraints Identifying Pricing Objectives PRICING OBJECTIVES: involve specifying the role of price in an organization’s marketing strategic plans Profit Sales Market Share Volume Survival Social Responsibility Profit -often measured in ROA or ROI - Managing for long-run profit - A company gives us immediate profit in exchange for achieving a higher market share - by developing quality products to penetrate competitive markets - products priced relatively low, but high expected market share - Maximizing current profit - Common in many firms because the targets can be set and performance measured quickly
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Marketing Notes-chapt 13 - Chapter 13 What is Price PRICE...

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