MKT ch13
inelastic
1>PE a small decrease in price dosent really change demand
average revenue
=TR/Q
marginal revenue
=change in TR/ change in Q
elastic demand
PE>1 a small decrease in price creates a large increase in demand
margin analysis
a continuing concise trade off of incremental costs against incremental revenues
demand curve
a graph relating the quality sold and price, price by demand
demand factors
factors that determine consumers willingness and ability to pay for products and services
pricing constraints
factors that limit the range of prices a firm may set
pricing objectives
involve specifying the role of price in an organization's marketing and strategic plans
monopolistic competetion
is the second-most competitive market structure and very common.there are many buyers and sellers, and there are relatively few barriers to entry. The products are all very similar, but because consumers may perceive each seller's product differently, the sellers in a monopolistic competitive market are price makers.Each individual producer tries hard to distinguish his product through product differentiation.Each firm in monopolistic competition is trying to create a functional monopoly over its own version of a product. ex. peanut butter
pure monopoly
no competeion, sole seller of the product, but they must keep the price reasonable or competition could come into the field
price equation
price=list price -incentivies and allowances+extra fees
profit equation
profit=total revenue-total cost
price
the money or other considerations exchanged for the ownership or use of a product or service
price elasticity
the percentage change in quality demanded relative to a percentage change in price
value pricing
the practice of simultaneously
the 6 steps organizations go through to set price
1.identify pricing objectives and contraints 2. estimate demand and revenue 3. determine cost volume and profit relationships 4. select approximate price level 5. set list or quoted price 6. make special adjustments
total revenue
=price *quality
breakeven analysis
a technique profit relationship between total revenue and total cost to determin profit ability at various levels of output
barter
exchanging products and services for other products and services rather than for money
managing for long-run profits
give up immediate profit by developing quality products to penatrate competitive markets over the long term
pure competition
has almost no competetion is able to set the price (ex.selling corn)
maximizing current profit objective
is very common in many firms because the targets can be set and performance measured quickly
oligoply
not many competetions but they try to deferintate themselves by nonprice factors because that could lead to pricing war
breakeven point
the quality at which total revenue and total cost are equal
value
the ratio of percieved benefits to price ->percived benefits/price
target return objectives
when a firm sets a profit goal, usually determined by its board of directors
unitary demand
when the percentage change in price is identical in the percent change in demand
reference value
which involves comparing the costs and benefits of substitute items