AEM 2400 Prelim 3 notes

AEM 2400 Prelim 3 notes - AEM 2400 Prelim 3 notes Chapter...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
AEM 2400 Prelim 3 notes Chapter 13: Building the Price Foundation. Jeff Fluhr and Eric Baker: Need a actually turning the plan into reality wasn’t as  easy as the two entrepreneurs expected. StubHub.  StubHub also has direct relationships with sports leagues so that the site can generate extra  ticket sales. Internet websites have revolutionized pricing and efficiently connecting buyers and sellers.  L01: Identify the elements that make up a price.  - Words that can mean price: tuition, rent, interest, premium, fee, dues, fare, salary,  commission, wage. - Price: the money or other considerations exchanged for the ownership or use of a good  or service.  - Barter: Practice of exchanging goods and services for other goods and services rather  than for money. - Most products, money is exchanged. However, the amount paid is not always the same  as the list price because of discounts, allowances, and extra fees. - Price equation o Final price=List price- (incentives +allowances)+ extra fees.  - Price as a indicator of value o Value is the ratio of perceived benefits to price, or Value=Perceived benefits/  Price o Value-pricing: the practice of simultaneously increasing product and service  benefits while maintaining or decreasing price. For some products, price  influences consumers’ perception of overall quality and ultimately its value to  consumers.  o Reference value- comparing the costs and benefits of substitute items.  “supersizing” at fast-food restaurants.  - Firm’s Profit equation:  o Profit=total revenue-total cost o = (unit price x Quantity sold) – ( Fixed cost +Variable cost) o What makes this relationship even more complicated is that price affects the  quantity sold.  - The importance of price in the marketing mix necessitates an understanding of six major  steps in the process organizations go through in setting prices o Identify pricing objectives and constraint
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Objectives like profit, market share, and survival Constraints like demand for product class and brand, newness, costs,  and competition o Estimate demand and revenue Demand estimation Sales revenue estimation Price elasticity estimation o Determine cost, volume, and profit relationships Cost estimation Marginal analysis, in relation to profit.  Break-even analysis, in relation profit.  o Select an approximate price level o Set list or quoted price o Make special adjustments to list or quoted price.  L02: Recognize the objectives a firm has in setting prices and the constraints that restrict the  range of prices a firm can charge - Pricing Objectives: involve specifying the role of price in an organization’s marketing and 
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/21/2009 for the course AEM 2400 taught by Professor Mclaughlin,e. during the Fall '07 term at Cornell.

Page1 / 9

AEM 2400 Prelim 3 notes - AEM 2400 Prelim 3 notes Chapter...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online