Marketing 300 Final Exam

Markup on Costs = ( Markup / Cost ) x 100% Markup on Selling Price = ( Markup / Selling Price) x 100%

#1. A manufacturer produces table lamps at unit variable cost of $25. If it wants a markup of 50% on cost, what should the selling price be? At that price, what is the unit margin? Markup on Costs = ( Markup / Cost ) x 100% Selling price = $25 X 50% + $25 = $37.50 Unit margin = selling price - unit variable cost = $37.50 - $25 = $12.50 #2. If the cost for a Taco Bell taco is $1 and the company wants to apply a 70% markup on its cost, then Taco Bell will sell tacos to consumers for ________. If Taco Bell wants to sell the tacos for $1.99, then the markup on the selling price is _________. To apply a 70% markup on its cost, Taco Bell sells tacos to consumers for $1.70 If Taco Bell wants to sell the tacos for $1.99, then the markup on the selling price is 49.75% or about 50% { That is: (1.99 - 1)/1.99 X100% } #3. If the cost for a Taco Bell burrito is $1.25 and the company is willing to live with only a 40% markup on its costs for this particular product, then Taco Bell will sell its burritos to consumers for only __________. If Taco Bell wants a markup of 40% on price, then the selling price is ___________. Answer to question #3: If Taco Bell markups its costs by 40% on a burrito that costs $1.25 to make, then the burritos must be sold to consumers for $1.75. {1.25X0.4 + 1.25 = 1.75} If Taco Bell wants a markup of 40% on price when its cost for burrito is $1.25, then (Selling price - 1.25)/selling price = 0.4 Price - 1.25 = 0.4 X Price Price = $2.08

Estimating Demand (Continued).... Price elasticity (E) = Positive or negative?

% change in quantity ÷ % change in price Price elasticity is usually negative If |E| > 1, elastic demand If |E| = 1, unitary demand If |E| < 1, inelastic demand

In a local target market of 200,000 households, 60% of them subscribe to the Daily News.

(1) If the CPM of an ad insert is $2, how much does it cost to insert an ad? (2) If a GRPs of 300 desired, how many times should the ad be run?

Step 2: Estimating Demand & Estimating Revenue

(A demand curve): --shows the maximum number of units that will be sold at a given price) (Demand is affected by factors such as) --consumer tastes --competition --consumer income (Movement along vs. shift of a demand curve) (Price Elasticity of Demand) --Price elasticity measures how sensitive consumer demand is to changes in price What determines price elasticity? --Availability of substitutes --Necessity, quality, prestige, uniqueness or exclusiveness --Total expenditure for the product relative to income Q: Would a firm rather have consumers who are high or low in price elasticity? ---Low in elasticity cause they can sell product at a higher price with higher demand

Importance of Channel Decision Making

(Channel decisions have long-run effects.) It is very hard to break a particular channel structure and start a new one. ----It is usually harder to change than product, price, and promotion decisions Distribution channels involve more than one party. It could lead to conflict if not designed and managed properly. ----(Vertical conflict) Vertical conflicts involve a disagreement between two channel members on consecutive levels. For example, if the toy manufacturer discovers its products are arriving at retail stores later than scheduled, a conflict might develop between the manufacturer and the wholesaler responsible for shipping to retailers. ----(Horizontal conflict) A horizontal conflict refers to a disagreement among two or more channel members at the same level. For example, suppose a toy manufacturer has deals with two wholesalers, each contracted to sell products to retailers in different regions.

Trends in Retailing global exp e commerce/mobile intertype competition multi-channel retailing

(Global expansion of major retailers) (Growth of non-store retailing, especially online retailing (e-commerce + mobile)) ****(Increasing "intertype competition") ----Competition among different types of retailers ****(Multi-channel retailing) ----Combining store with non-store channels to better serve customers ----"Integration" becomes challenging

Promotion stages on the PLC

(IPR) Introduction -- to inform (advertising) Growth -- to persuade (advertising to differentiate) Maturity -- to remind (reminder advertising, discounts, coupons, etc.) Decline -- to phase out (little $$ spent on advertising)

Channel Structure & Key Terms: AWR = C.I.

(Manufacturer) V 1. Agent/Broker > V 2. Wholesaler > CHANNEL INTERMEDIARIES V 3. Retailer > V (End-Customer or Consumer)

Importance of Retailing utilities!!!!!

(Retailing is a large part of economy) (Customer utilities offered by retailers) ----Time utility (available when needed) ----Place utility (available where needed) ----Form utility (production of goods / service) ----Possession utility (easy to purchase or to own)

Step 4: Pricing Approaches (Strategies)

(Select an appropriate Price Level) Demand-oriented approaches --skimming --penetration --prestige --price lining --odd-even --target --bundle --yield-management Cost-oriented approaches --standard markup --cost-plus --experience curve Profit-oriented approaches --target profit --target return on sales --target return on investment Competition-oriented approaches --customary --above, at, or below market --loss leader

Estimating Revenue: Total Revenue (TR): Average Revenue (AR): Marginal Revenue (MR): --usually the unit price you charge

(TR) Total Revenue = total money received from the sale of this product P = Unit Price Q = Quantity TR = P * Q (AR) Average Revenue = the average amount of money received for selling one unit of a product, or simply the price of that unit. AR = TR / Q = P (MR) Marginal Revenue = the change in additional revenue that results in producing and marketing one additional unit MR = Change in TR / 1 unit increase in Q = change in TR / change in Q = slope of TR curve

Channel Decision Making IS-EFV

(feasible alternative to channel design) Vertical integration--ownership ^ Franchised systems ^ Exclusive distribution ^ Selective distribution ^ Intensive distribution -----increasing level of control

3. Sales Promotion:

----(Short-term incentives) to encourage the purchase of a product (Pro) ---offer strong incentive to invite and reward quick responses (Cons) ---Short term incentive, not effective in building long term brand equity ---Easily duplicated and easily abused

****Step 1: Pricing Objectives & Pricing Constraints

--------PRICING OBJECTIVES (Profit-oriented objectives) --Profit maximization (long run vs. short run) MR = MC --Target return (e.g., return on investment or ROI) (Sales-oriented objectives) --Seeks some level of unit sales, dollar sales, or market share, without referring to profit --May lead to profitless "success" (Social responsibility) --Products such as the world's first heart pacemaker follow a higher profit due to the obligations the product has to customers and society in general. responsible for health. --------PRICING CONSTRAINTS (Product characteristics) --Positioning --Stage in the product life cycle (Costs of production, marketing, and etc.) (Customers' willingness to pay - demand analysis) (Competitive conditions) --Competitors' prices for the same product --Availability of substitutes (Legal and regulatory constraints)

1. Advertising

----Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor (Pros) ---Reaching mass buyers ---Consistent, firm has almost 100% control ---Building a long-term image and brand equity (Cons) ---Costly ---Lack of feedback ---Advertising clutter & loss of audience attention

3. Budget & design the advertisement

----Appeal - content / what to communicate E.g., fear, sex, and humorous appeals ----Messages in the ad should be consistent with the positioning strategy of the good or service

4. Public Relations:

----Building good relations with the company's various publics >>Obtaining favorable publicity >>Building up a good company image >>Handling unfavorable rumors, stories, and events (Pros) ---More credible than advertising and personal selling ---Reaching those who try to avoid personal selling and advertising (Con) ---not under direct control of the firm

2. Set advertising objectives

----In general, fall into the categories of informing, persuading, reminding ----Should be specific and measurable ----Recall: Citibank vs. BMW in the video case

2. Personal Selling

----Personal presentation by the firm's sales force for the purpose of making sales and building customer relationship (Pros) ---Effective, customized communication ---Immediate feedback ---Building relationship with customers (Cons) ---Most expensive (in terms of $ per exposure) ---Possibility of not being consistent due to human factors ---Trust issue

4. Select advertising media

----TV advertising is still taking the lead; ----Traditional media (e.g., print ad in newspapers, magazines) is declining; ----Internet and mobile advertising has a lot of room for growth; ----****Digital ad in US: ~ $40-50 billion / year, double-digit growth ----****Social media transformed the concept of advertising from "one-way broadcasting" to "two-way interaction" - it's all about engaging the customers with the brand.

Promotional mix strategy factors: TPSC

----Target audience ----Product characteristics ----Stage in PLC ----Channel strategies: push vs. pull

1. Identify the target audience:

----With whom do you want to communicate ----Recall: Citibank vs. BMW in the video case

Marginal Analysis: Profit Maximization:

----as long as marginal revenue is greater than marginal cost, a firm should expand its output of the product Profit is maximized when MR = MC

Promotion (i.e., Marketing Communication): Integrated marketing communications (IMC):

----communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior ----(designing marketing communications programs) that coordinate all promotion methods to provide a consistent message across all audiences

Retailing: Retailer:

---All activities--- involved in selling, renting, and providing goods and services to ultimate consumers for personal or household use. Business whose sales come primarily from retailing

3. Exclusive Distribution

---Exclusive distribution is selling through only (one middleman in a particular geographic area) (Use exclusive distribution when): --retailer/dealer is primarily involved in undertaking customer-side activities, and --retailer/dealer activities are very specific to your product, i.e. retailer generates demand and disseminates information (Exclusive arrangements could cause legal problems. They are not per se illegal though.)

1. Intensive distribution

---Intensive distribution is selling a product through ALL responsible and suitable wholesalers or retailers who are willing to stock and/or sell the product (Use intensive distribution when): ---retailers/dealers are not required to undertake many activities that influence product quality or service ---location convenience and low purchasing effort are most important for buyers ---promotion is mostly done by manufacturers

Google AdWords

---Mainly offers CPC (cost-per-click) advertising ---Appropriate for advertisers who seek immediate responses ---Inappropriate for advertises who are building brands

Google AdSense

---Offers both CPC and CPM advertising through banner ads ---Allows publishers to monetize their content

Problems in Managing Sales Promotions

---Sales promotion may erode brand loyalty and encourage consumers to buy on deals ---Some consumers may simply speed up future purchases and stock up, without increasing consumption (stockpiling) ---Middlemen may also stock up when there is a trade promotion ---Companies often have little choice but to use sales promotions to offset competitors' promotions

2. Selective Distribution

---Selective distribution is selling through more than one, but less than all, of the intermediaries who are willing to carry the product (Use selective distribution when): ---retailers/dealers have to undertake some image-building activities that influence product quality, "but" ---these activities are not specific to your product ---manufacturers want to reduce price competition among retailers so that they have more incentive to sell the product

Non-store Retailing

---Telemarketing ---Direct selling (i.e., door-to-door retailing) ---Automatic vending ---Direct mail and catalogs ---Television home shopping ---Online retailing (e-commerce) ---Mobile commerce

Competition-Oriented Approaches Customary pricing: Loss leader pricing:

--When tradition, standardized channel of distribution, or other (competitive factors) dictate the price --May modify the product to keep the price stable over time --Setting some very low prices to attract customers into retail stores Examples: milk, butter, eggs, CDs Purpose: to sell other products in one "basket" Potential issue?

Profit-Oriented Approaches Target profit pricing:

--set an "annual" target of specific dollar volume of profit Profit = TR - TC = (P*Q) - (FC + UVC*Q) Given target profit, FC, UVC, and expected quantity Q, we can solve for P.

Four Types of Promotion Methods: A-PSP

1. Advertising 2. Personal Selling 3. Sales Promotion 4. Public Relations

To develop an effective advertising program (5) EFFECTIVE ADVERTISING PROGRAM: (BIG 5)

1. Identify the target audience 2. Set advertising objectives 3. Budget & design the advertisement 4. Select advertising media 5. Evaluating advertising effects

DEGREE OF DISTRIBUTION DENSITY

1. Intensive distribution V 2. Selective distribution V 3. Exclusive distribution (# of channel intermediaries decreases)

Practice problem #1 --Manufacturer produces product X at unit variable cost of $25. Wholesalers purchase the product from the manufacturer at the price of $50. Retailers purchase the product from wholesalers at the price of $75. Consumers purchase the product from retailers at the price of $100. Calculate the markup on cost for the manufacturer, wholesalers, and retailers. Practice problem #2 --The bookstore purchases the textbook microeconomics at $30 each. It usually applies a 60 percent markup on its cost for textbooks. This means that it will charge students _________ for the book microeconomics.

100% markup 30 * 60 + 30 = $48

Types of Retailers Based on? (Level of Service, Price, Breadth and Depth of product assortment)

>>>>>(Based on level of service): -(Self service (e.g., Costco, gas stations, Redbox)) ----Cost saving ----Convenience -(Limited service (e.g., Walmart, Target)) -(Full service (e.g., Neiman Marcus, Nordstrom)) >>>>>(Based on price): -(High price (e.g., upscale department stores, specialty stores)) -(Middle price (e.g., JCPenny, Sears)) -(Low price) ----Discount stores (e.g., Walmart, Kmart) & Off-price stores ----Factory outlets ----Independents (e.g., TJ Maxx, Marshalls) >>>>>(Based on breadth and depth of product assortment): Convenience stores - very narrow and shallow e.g., 7-Eleven, Stop-N-Go Specialty stores - very narrow but deep e.g., Foot Locker, Victoria's Secret Category killers - narrow but very deep e.g., Best Buy, Staples, Toys R Us Department stores - several departments, each is like a specialty store; e.g., Neiman Marcus, Sears Supermarkets - broad and fairly deep, specializing in groceries; e.g., Kroger, Safeway Superstores (supercenters/hypermarkets) - broadest and deepest; e.g., Walmart supercenters, Super Target, Carrefour

Channel Strategies: (Push vs. Pull) -- no agent/broker

A. (Push Strategy): manufacturer > wholesaler > retailer > consumer B. (Pull Strategy): consumer > retailer > wholesaler > manufacturer

Advertising

Advertising: any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor

1. Explain the difference between advertising and publicity when both appear on television.

A: Since advertising space on TV is paid for, a firm can control what it wants to say and to whom the message is sent. EX: commercial. Since publicity is an indirectly paid presentation of a message about a firm or its goods or services, there is little control over what is said to whom or when. EX: Pepsi drank by Will Farrell in a movie.

2. Which promotional element should be offered only on a short-term basis?

A: sales promotion

Advertising Spending vs. Media Consumption ---Across Different Media

Ad spending Total internet = $50 billion Total mobile = $13 billion ----only 8% focuses on mobile when $25+ Billion are using mobile = US opportunity

Trade Promotions

Allowances and discounts: focus on maintaining or increasing inventory levels in the channel of distributions ---Merchandise allowance ---Case allowance ---Finance allowance Cooperative advertising: manufacturers pay a percentage of retailers' local advertising expense Dealer incentives and training program: ---Sales contests ---Bonuses

Break-Even Analysis

BEP = fixed cost ÷ unit margin = fixed cost ÷ (unit price - unit variable cost) --Given fixed cost & unit margin, you should be able to calculate BEP --If fixed cost or unit margin have changed, you should be able to calculate the change in BEP

4. Selecting Advertising Media (DEFINE) Reach Rating Frequency Gross Rating Points (GRPs) Cost per thousand (CPM)

Basic terms Reach - number of people exposed to the medium (e.g., Dallas Morning News) Rating - the percentage of people in the target market who are exposed to the medium Frequency - the average number of times a person in the target market is exposed to the campaign.....clickers. ----This measures the impact of the campaign Gross Rating Points (GRPs) ----GRPs = rating * frequency * 100 Frequency = (GRP / rating * 100) Cost based on impressions, measured by Cost per thousand (CPM) Cost of inserting 1 ad = (target market * rating)($ad/1000) ----CPM = Cost of reaching 1,000 individuals in a given medium

Breadth Vs. Depth of product assortment Definition & Ex:

Breadth: # of different product lines Ex: Shoes, appliances, CD's, men's clothing Depth: # of items within each product line Ex: CD's---Jazz, classical, rock, hip-hop, country

Break-Even Analysis

Break-even analysis is a tool for analyzing revenues and costs to ---find the profit at various levels of quantity sold Break-even point (BEP) is the quantity at which revenues equal costs and beyond which the company begins to make a profit ----At BEP, profit = 0 ----BEP = FC + 0 / UM ----Q = FC + Profit / UM P × BEP = FC + UVC × BEP, so BEP = FC ÷ (P - UVC) = FC ÷ unit margin

*****CHANNEL DECISION MAKING

Channel Decisions V V Channel Channel Design Management -Select -Select & motivate individual channel a specific members channel/ channels -Evaluate channel members' performance -select the distribution density

Types of sales promotion (Consumer Promotions) --deals --coupons --samples --rebates --loyalty/reward programs

Consumer Promotions Deals: offer discounted prices in a short time. E.g., "Super Saturday Sale" at Sears. ---Brand switching ---Category expansion ---Forward buying Coupons: offer discounted prices to consumers who redeem coupons. E.g., Free Standing Insert (FSI) on Sunday newspapers ---Price discrimination ---Encourage new product trials Samples: give a sample of the product for free. ----E.g., free sample at Sam's Club. ---Encourage new product trial Rebates: give a cash refund by mail or instantly. E.g., OfficeMax mail-in rebates catalog. ---Get customer information ---Price discrimination Point-of-purchase display: colorful advertising signs in high-traffic area. E.g., Coke $3.99 for 24 packs. ---Get consumers' attention Premiums: merchandise offered free or at a significant savings over its retail price. ---Encourage purchase ---Contests and Sweepstakes ---Encourage purchase Loyalty/reward programs: encourage and reward repeat purchases by offering a premium as purchases accumulate. ---E.g. frequent-flier programs

Sales Promotion:

DEF: short-term promotion activities to encourage purchase or sales of a product (Sales promotion) can often be implemented quickly and get sales results sooner than advertising Types of sales promotion ---(Consumer promotions) aim at end consumers ---(Trade promotions) aim at channel members (e.g., wholesalers, retailers)

The Role of Channel Intermediaries

Each channel intermediary "pockets" some of the customer's purchase price ---Recall unit margin, percent margin, markup chain, target pricing, standard markup pricing Discussion point: Why are channel intermediaries needed? The Role of Channel Intermediaries Indirect channels are useful if: --channel intermediaries can help lower distribution costs; --manufactures lack the resources to sell directly to consumers; --make product widely available (i.e. convenience for consumers); --intermediaries can help to absorb credit risks; intermediaries' expertise is needed to provide service.

Promotion Objectives (3 OBJECTIVES)---IPR

Informing ----In the introduction stage of the PLC, you need to create awareness of the new product category or the new brand Persuading ----If consumer attitude is negative, try to improve ----If current position of brand is not as desired, try to re-position Reminding ----Ensure brand is in the consumers' consideration set ----Increase or stabilize sales, especially useful in the maturity stage of the PLC

What is a channel of distribution? Place/Distribution: Marketing Channel:

Making goods and services available in the right quantities and locations -when customers/consumers want them A marketing channel consists of independent individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

Problem #2 Manufacturer produces product X at unit variable cost of $25. Wholesalers purchase the product from the manufacturer at the price of $50. Retailers purchase the product from wholesalers at the price of $75. Consumers purchase the product from retailers at the price of $100. Calculate the unit margin and percent margin / markup on price for the manufacturer, wholesalers, and retailers

Manufacturer: Unit margin = 50 - 25 = 25 Percent Margin / markup = 50 - 25 / 25 = 50% Wholesalers: Unit margin = 75 - 50 = 25 Percent Margin / markup = 75 - 50 / 50 = 50% Retailers: same Unit margin / markup = same Percent Margin = same *****unit margin and percent margin / markup are the same for all.

Problem #3 Publishing company has a fixed cost of $200,000. Its unit variable cost is $10/book. The price of the book is $20. - Calculate the BEP - If the publisher wants to make a profit of $100,000, how many books should it sell? Target Profit = TR - TC = (P x Q) - [FC + ( UVC x Q)]

P * BEP = FC + (UVC * BEP) 20(BEP) = 200,000 + 10(BEP) BEP = 200,000 / 20-10 BEP = 20,000 Target Profit: TR - TC 100,000 = P *(20,000) - ((200,000 + (10*20,000)) P*20,000 = -100,000 - ((200,000 + (10*20,000)) P20,000 = -500,000 P = $25 --------30,000

5. Evaluating advertising effects

Pretests (before the ad is placed in any medium) Tests whether the ad is communicating well Posttests (after the ad has been shown to the target audience) ---Recall (aided/unaided) ---Attitude ---Sales test How about in the digital world - often easier to measure effectiveness

For the seller price effects what?

Price affects both the sales volume and profit

Marginal Analysis and Profit Maximization

Profit = Revenue - Total Cost π = P×Q - TC = P×Q - (FC + VC) = P×Q - FC - VC = P×Q - FC - UVC (Q)

Integrated Marketing Communications

Promotional Mix: the exact combination of different promotional methods Factors influencing a promotional mix strategy: ----Target audience ----Product characteristics ----Stage in PLC ----Channel strategies: push vs. pull

Competition-Oriented Approaches Below-market pricing At-market pricing Above-market pricing

Steal customers, price war May signal poor quality Establish the going market price and set a reference price Highlight other features (differentiate) Quality signal How to justify the price?

Step 3: Determine cost, volume & profit relationships ---(Analyzing Cost)

Total cost (TC) = fixed cost (FC) + variable cost (VC) Fixed cost (FC) does not change with the quantity of a product Variable cost (VC) varies directly with the quantity of a product ---Unit variable cost (UVC) = variable cost (VC) ÷ quantity (Q) Marginal cost (MC) is the change in total cost that results from producing and marketing one additional unit of a product ---MC is the wholesale price you paid (plus other variable costs)

Marginal Analysis and Profit Maximization

Unit margin (unit markup) = per unit Rev (price) - per unit VC ---measured in $ amount Percent margin , or markup on price = (unit margin) _________________ (per unit revenue (price)) ---What % of what you get (the per unit revenue / price) is your profit margin? Markup on Costs = ( Markup / Cost ) x 100% Markup on Selling Price = ( Markup / Selling Price) x 100%

Profit-Oriented Approaches --Profit maximization approach: --Rule for maximizing profit:

focuses on the changes in TR and TC from selling one more unit - to find the most profitable price and quantity set the price where MC = MR If MR > MC, firm should expand output of product

Profit Equation:

profit = revenue - costs = (P * Q) - (FC + VC)(Q) -----See "double" (Direct vs. Indirect) impact of price on profit----- (P * Q) = direct impact on profit (FC + VC)(Q) = indirect impact on profit through quantity

Demand-Oriented Approaches (Advantages & limitations) Skimming pricing: Penetration pricing: Price lining: Odd-even pricing: Target pricing: Prestige pricing: Yield management pricing: (transportation common) Cost-Oriented Approaches Standard markup pricing %:

starts at the highest possible price in the introduction stage of a product, and lowers the price later Advantages: --Capitalize on the price insensitivity of early buyers --Keeps demand consistent with limited production capacity --High profit margin, covers high initial costs of R&D and product introduction Limitations: --Attracts competitors to enter the market --Will lose market share if consumer loyalty does not build up --Not desirable if the objective is to achieve high market share starts at a low price to get large unit sales volume and faster diffusion Advantages: ---Lowers chance of competitive entry ---Faster diffusion may help build image and loyalty ---Selling larger quantities may result in lower costs because of economies of scale Limitations: ---Low profit margin. Not good unless the unit sale volume is high enough ---The firm needs enough capacity to serve high demand ---Later entrant may have better product setting a few price levels for a product line and then marking all items at these prices Example: shirts sold at $59, $79, and $99 Advantage: simplicity Influences buyers' perception of price or product by ending the price with certain numbers (almost purely psychological) ----Odd pricing (excluding"5") leaves the impression of a deal ----Even pricing (including "5") gives a product a wholesome and "upscale image" manufacturer deliberately adjusts the composition and features of a product to achieve the target price to consumers Step 1: estimate the price that the ultimate consumer would be willing to pay Step 2: work backward through the markup chain of retailers and wholesalers to determine the wholesale price Step 3: adjust design of the product accordingly to achieve the target price Setting a high price to suggest high quality or high status Target quality- or status-conscious consumers Demand increases with price in a certain price range ---Charging different prices to maximize revenue for a set amount of-----capacity ---Used by airlines, hotels, cruise ships, and car rental companies (Determine price by adding a percentage to cost) (Used by many wholesalers and retailers) ---Can use the same markup level for a product category ---Markup level can vary across different product categories (Markup on cost (%)) ---Unit margin / cost X 100%

6 Steps in setting prices (IEDSSM)

step 1 Identify objectives and constraints step 2 Estimate demand & revenue step 3 Determine cost, volume & profit relationships step 4 Select approximate price level step 5 Set list or quoted price step 6 Make special adjustments to list or quoted price

Price: For the buyer: Customer Value =

the money (or other goods and services) exchanged for the ownership or use of a good or service Price is what must be given up to get the benefits of the product. It plays a direct role in shaping customer value -----Perceived Benefits ÷ Price-----