MKT 3300 FINAL

6 Broad Pricing Objectives

1. Profit (long-term goal) 2. Unit Volume 3. Sales 4. Survival 5. Market Share 6. Social Responsibility

Change in Demand and Change in Quantity Demanded- defintion

A change in demand is when the whole curve shifts and a change in quantity demanded is movement along the demand curve due to a change in price. Price Doesn't shift the curve.

Break Even Formula

BE volume= total fixed cost divided by price MINUS UVC

Average Revenue (AR) & formula

Average revenue (AR) -Is the average amount of money received for selling one unit of the product, or Total Revenue/Quantity = Unit Price

What is break-even analysis?

Break-even analysis is the process used to determine profitability at various levels of sales. The break-even point is the point where revenues from sales equal all costs.

Shifts in demand vs. changes along the demand curve.

Change in price --> change in quantity demanded --> movement along the demand curve Change in income, preferences, prices of other goods --> chg. in demand --> shift of the demand curve.

Dr. Wu says about demand shifts vs. changes along the demand curve

Changes only affected by price vs. q, any other factor is a shift along demand curve

Fixed Cost vs Variable cost

Fixed cost: Does not change with production Examples: Rent, Overhead, Long-term contracts, opportunity costs Variable Cost: Changes with production Examples: Cost of materials that go directly into the product, wages

elastic vs. inelastic vs. unitary

Elastic Demand: % change in QD > % change in P Inelastic Demand : % change in QD <% change in P Unitary Demand: % change in QD = % change in P

How to achieve profit maximization?

MR=MC

Change in Demand vs. Change in Quantity Demanded- movement patterns

Qd: change in amount purchased caused by a change in price (movement along the curve). D: shift of entire curve to left or right

Types of Demand-based Pricing

Skimming Vs. Penetration Pricing (New Products) Bundle Pricing Price Lining Odd-Even Pricing Prestige Pricing Target Pricing Yield Management

break-even analysis involves finding the point where

TC=TR

what is marginal analysis?

analysis that involves comparing marginal benefits and marginal costs *marginal revenue, Marginal cost, incremental changes in cost or revenue for additional unit

Value can be defined as....

as the ratio of perceived benefits to price or: value = perceived benefits/price

Law of Demand

ceteris paribus, if price rises , quantity demanded FALLS . •Determinants of Demand -Income and Wealth, Price and availability of substitutes and Complements, Tastes and preferences, Expectations

What does the demand curve show?

relationship between price and quantity demanded

price elasticity of demand

the percentage change in quantity demanded (QD) relative to a percentage change in price (P) and can be expressed as follows: E = % change in QD % change in P

total revenue & formula

the total amount of money a firm receives by selling goods or services Price x Quantity

Marginal revenu (MR) & formula

•Marginal revenue (MR) -Is the change in total revenue obtained by selling one additional unit, or -The Slope of the Total Revenue Curve