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C HAPTER 13: B UILDING THE P RICE F OUNDATION What is a Price? -The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service. Barter - the practice of exchanging products and services for other products and services rather than for money Price and the Global Marketplace -Marketing Matters box describes how the “world is flattening” Price as an Indicator of Value Value= Perceived benefits/Price Value Pricing - the practice of simultaneously increasing product and service benefits while maintain or decreasing price. Price in the Marketing Mix Profit= Total Revenue – Total Cost =(Unit Price X Quantity sold) – (Fixed cost + Variable cost) -Price affects the quantity sold -Quantity sold affects a firm’s cost because of production, price, also indirectly affects cost Thus pricing decisions influence both total revenue (sales) and total cost Six Major Steps: 1. Identify pricing objectives and constraints a. Objectives like profit, market share, and survival b. Constraints like demand for product class and brand, newness,, cost, and competition. 2. Estimate demand and revenue a. Demand estimation b. Sales revenue estimation c. Price elasticity estimation 3. Determine cost, volume, and profit relationships a. Cost estimation b. Marginal analysis, in relation to profit c. Break-even analysis, in relation to profit.
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This note was uploaded on 10/19/2011 for the course MARKETNG 301 taught by Professor Schewe during the Spring '09 term at UMass (Amherst).

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