Marketing chapter 10

Fixed costs, variable costs, and total costs

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oligopolistic competition

A market structure in which a few firms sell either a standardized or differentiated product into which entry is difficult in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms) and in which there is typically nonprice competition.

monopolistic competition

A market structure in which many firms sell a differentiated product into which entry is relatively easy in which the firm has some control over its product price and in which there is considerable nonprice competition. Examples are grocery stores and gas stations

pure monopoly

A market structure in which one firm sells a unique product into which entry is blocked in which the single firm has considerable control over product price and in which nonprice competition may or may not be found.

Cost plus pricing/markup pricing

Adds a standard markup to cost of the product benefit- sellers are certain about costs, prices are similar in industry and price competition is minimized, buyers feel it is fair Disadvantages-ignores demand and competitor prices

Good-value pricing

Offers right combination of quality and goods service at a fair price

Value based pricing

The company first assesses customer needs and value perceptions. It then sets its target price based on customer perceptions of value. The targeted value and price drive decisions about what costs can be incurred and the resulting product design. As a result, pricing begins with analyzing consumer needs and value perceptions, and the price is set to match perceived value.

Experience curve

The drop in the average per-unit production cost that comes with accumulated production experience.

Value added pricing

attaches value-added features and services to differentiate offers, support higher prices and build pricing power

Cost curve SRAC and LRAC

look this up

demand curve

price elasticity of demand, inelastic demand, elastic demand

Break-even pricing, Target return pricing

price is at total cost with no profit - price is at which the firm will break even or make the profit it's seeking

cost based pricing

product driven: chart design a good product->determine costs-> set price based on costs-> convince buyers of products value as part of a company's overall value proposition, price plays a key role in creating customer value and building customer relationships. Instead of running away from pricing, savvy marketers embrace it.

Target costing

start with ideal selling price based on consumer value and then ensure costs will meet that price

Organizational should consider

who can set and influence the price

Pure competition

A market structure in which a very large number of firms sell a standardized product into which entry is very easy in which the individual seller has no control over the product price and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers. Examples : Agricultural products such as potatoes and wheat

Customer value based pricing

Customer value-based pricing uses buyers' perceptions of value, not the seller's cost, as the key to pricing. Value-based pricing means that the marketer cannot design a product and marketing program and then set the price. Price is considered along with all other marketing mix variables before the marketing program is set.

Everyday low pricing, High-low pricing

EDLP same price every day with few price discounts High low- mainly at high price and then drop it

What is a Price

Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs Price is a concept that emerged in the late twentieth century.

Competition based pricing

Priced based on competitor's consumers will base their judgments of a product's value on the prices that competitors charge for similar products

Other things that affect price decisions

Pure competition, monopolistic competition, oligopolistic competition, pure monopoly economic conditions, reseller's response to price, government, social concerns

before setting prices....

marketer must understand the relationship between price and demand for its product