Lecture Ch 13_BB - Click to edit Master subtitle style...

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Unformatted text preview: Click to edit Master subtitle style Chapter 13: Building the Price Foundation Professor Jade DeKinder Jade S. DeKinder Jade S. DeKinder What You Will Know n The ratio that represents value n The profit equation n How to calculate elasticity of demand and the different types of demand elasticity n How to calculate break-even point Jade S. DeKinder Jade S. DeKinder What is Price? Price: money or other considerations exchanged for ownership or use of a good or service q Barter: exchanging goods and services for other goods and services rather than for money Jade S. DeKinder Jade S. DeKinder Price n Increases are caused by: n Extra fees (special fees) n Extra Charges (surcharges) n Penalties n Decreases are caused by: n Discounts n Allowances Final Price = List Price (incentives + allowances) + extra fees Jade S. DeKinder Jade S. DeKinder Price Indicates Value n Value is the ratio of benefits to price Value = Perceived Benefits Price n Perceived benefits include quality and durability n Value-pricing: simultaneously increasing benefits while maintaining or decreasing price n In some cases price can influence perceived quality, Jade S. DeKinder Jade S. DeKinder Pricing in the Marketing Mix Profit Equation: Profit = Total Revenue Total Cost Where: Total Revenue = Unit Price x Quantity Sold Total Cost = Fixed Cost + Variable Cost Jade S. DeKinder Jade S. DeKinder 6 steps in determining prices Jade S. DeKinder Jade S. DeKinder Step 1: Objectives & Constraints n Specifying the role of price in organizations marketing and strategic plans...
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Lecture Ch 13_BB - Click to edit Master subtitle style...

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