Mktg 3104 chapters 13 and 14 outlined

Mktg 3104 chapters 13 and 14 outlined - Chapter 13-...

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Chapter 13- Building the price foundation Price - is the money exchanged for the ownership or use of a good or service Barter - the practice of exchanging goods and services for other goods and services Final price = listed price – (incentives + allowances) + extra fees Value - the ratio of perceived benefits to price Value= (Perceived benefits/price) Value pricing - practice of simultaneously increasing product and service benefits while maintaining or decreasing price Profit equation- Profit = Total revenue – Total cost Profit =(unit price X quantity sold) – (fixed cost + (variable cost X quantity) Steps in setting price Step 1- Identify objectives and constraints Step 2- eliminate demand and revenue Step 3- determine cost, profit, volume relationships Step 4- set approximate price level Step 5- set list price Step 6- make special adjustments Step 1- Identify objectives and constraints Pricing objectives- specifying the role of price in an organizations marketing and strategic plans Profit measured in terms of return on investment or returns on assets Managing for long run profits - products are priced low, gives up immediate profit in exchange for achieving a higher market share in the long run Maximizing current profit- targets can be set and performances measured quickly, (target ROI) Market share- ratio of the firm’s sales revenue to those other competitors Unit volume - quantity produced or sold, as pricing objective Survival - profit, sales, and market share are less important objectives of the firm than mere survival Social responsibility - firm may forgo higher profit on sales and follow a pricing objective that recognizes its obligations to customers and society in general
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Identifying constraints Pricing constraints - factors that limit the range of prices a firm may set -the greater the demand for a product, the higher the price can be set -the newer a product and the earlier it is in the life cycle, the higher is the price that can usually be charged -in the long run, a firm’s price must cover all the costs of producing and marketing a product
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Mktg 3104 chapters 13 and 14 outlined - Chapter 13-...

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