Pts 1 ref 306 obj 19 6 top aacsb communication tbe

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PTS: 1 REF: 306 OBJ: 19-6 TOP: AACSB Communication | TB&E Model Pricing 17. How does price interact with the other three Ps of the marketing mix? ANS: PRODUCT. The product life cycle stage and the perceived relationship of price to quality of the product affect its price. Some students may also mention that price levels must be set according to the cost of the product, demand for the product, and elasticity of demand for the product. PLACE/DISTRIBUTION. Adequate distribution of a new product can often be attained by offering a large profit margin to wholesalers and retailers. Price can be set higher than normal if the product is distributed to outlets that are convenient to the consumer. Manufacturers can also gain more control over price by using exclusive distribution, franchising, or avoiding doing business with price-cutting discounters. PROMOTION. Price is often used as a promotional tool to increase consumer interest. Special low prices are often advertised as an inducement. Discount coupons, cents-off campaigns, price rebates, and other discounts are all price-promotion marketing tools. Trade promotions also are used. PTS: 1 REF: 306-309 OBJ: 19-6 TOP: AACSB Communication | TB&E Model Pricing 18. What is the impact of the Internet on pricing strategies?
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ANS: The Internet is enabling buyers to quickly and easily compare products and prices, putting them in a better bargaining position. At the same time, the technology allows sellers to collect detailed data about customers' buying habits, preferences — even spending limits — so they can tailor their products and prices. This raises hopes of a more efficient marketplace. PTS: 1 REF: 307-308 OBJ: 19-6 TOP: AACSB Communication | TB&E Model Pricing 19. Discuss how consumers use the price-quality relationship to evaluate goods and explain how marketers can take advantage of this consumer response. ANS: Consumers tend to rely on price as an indicator of product quality; that is, a higher price indicates higher quality in the form of better materials, more careful workmanship, or higher service levels. Conversely, lower price indicates lower quality as illustrated by the adage, "you get what you pay for." Marketers can take advantage of the price-quality phenomenon by increasing the price of the product to enhance the image of their product. This is known as a prestige pricing strategy. PTS: 1 REF: 309 OBJ: 19-6 TOP: AACSB Communication | TB&E Model Pricing
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  • Spring '10
  • Patterson
  • Supply And Demand, AACSB Reflective Thinking, TB&E Model Pricing

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