Marketing Chapter 13 Quiz 2

Value

= Perceived Benefits/ Price As perceived benefits increase, ____________ increases

Monopolistic competition

Both price competition, and non price competition (product features and advertising

Managing for long-run profits

Companies give up on immediate profit by developing quality products to penetrate competitive markets over the long term. Products are priced relatively low compared to their cost to develop, but the firm expects to make greater profits later because of its high market share

Pricing constraints

Factors that limit the range of prices a firm may set are referred to as __________________

Oligopoly

Few sellers who are sensitive to changes in each other's prices. Price leader, advertising but to avoid price competition

Social responsibility

Forgo higher profit by following a pricing objective that recognizes its obligations to customers and society in general. Think of Jetblue airlines very cheap flights out of puerto rico when hurricane irma approached.

Pricing objectives

Involve specifying the role of price in an organization's marketing and strategic plans.

Pure monopoly

One seller

Price elasticity of demand

Percentage change in quantity demanded/ percentage change in price Usually a negative number (if elastic)

Profit equation

Profit= total revenue (unit price x quantity sold) - total cost (fixed cost + variable cost)

Market Share

Ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself). Companies often pursue a market share objective when industry sales are relatively flat or declining.

prices

Six major steps for setting ______________ 1) Identify pricing objectives and constraints 2) Estimate demand and revenue 3) Determine cost, volume, and profit relationships 4) Select an approximate price level 5) Set list or quoted price 6) Make Special adjustments to list or quoted price Don't worry about last 3 steps, not in this chapter

Value pricing

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price

Break-even point

The quantity at which total revenue and total cost are equal. Beyond BEP is profit

Unit volume

The quantity produced or sold. Many firms use this as a pricing objective. Often sell multiple products at very different prices and need to match the unit volume demanded by customers with price and production capacity.

True

True or False Pricing Decisions affect both total revenue and total cost