Chapter 13

Chapter 13 - of units that will besold at a given price...

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Chapter 13 L01: Price is the money or other considerations (such as barter) exchanged for the ownership or use of a good or services. Although price typically involves money, the amount exchanged is often different from the list or quoted price because of incentives (rebates, discounts, etc.) allowances (trade) and extra fees (finance charges, surcharges, etc.). L02: Pricing objectives specify the role of price in a firm’s marketing strategy and may include profit, sales revenue, market share, unit volume, survival, or some socially responsible price level. Pricing constraints that restrict a firm’s pricing flexibility include demand, product newness, other products sold by the firm, production and marketing costs, cost of price changes, type of competitive market, and the prices of competitive substitutes. L03: A demand curve is a graph relating the quantity sold and price, which shows the maximum number
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Unformatted text preview: of units that will besold at a given price. Three demand factors affect price: (a) consumer tastes, (b) price and availability of substitute products, and (c) consumer income. These demand factors determine consumers’ willingness and ability to pay for goods and services. Assuming these demand factors remain unchanged, if the price of a product is lowered or raised, then the quantity demanded for it will increase or decrease, respectively. Three important forms of revenues impact a firm’s pricing decisions: (a) total revenue, which is the total money received from the sale of a product; (b) average revenue, which is the average amount of money received for selling one unit of a product (which is simply the price of the unit); and (c) marginal revenue, which is the change in total revenue that results from producing and marketing one additional unit....
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