MKTG Ch 13 learnsmart

profit =

(unit price x quantity sold) - (fixed cost + variable cost)

steps for setting prices

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 (IEDSSM)

the cost of changing prices is a pricing constraint, as a result most firms

change the prices of their products more often if they sell online

legal and regulatory issues and consumer demand are pricing ___ that limit what a company can charge for its products

constraints

selling via the internet reduces which pricing constraint

cost of changing prices

when the ny mets set higher ticket prices for games vs the ny yankees than for those vs the pittsburgh pirates, its pricing is constrained by

demand

which of the following may mean that the amount paid is not the same as the list price

discounts special fees allowances

a product for which nostalgia or fad factors come into play is likely to

have higher prices later in its product life cycle

actual price =

list price - incentives and allowances + extra fees

out of control ____ compared to foreign car companies resulted in the us gov investing billions in us car companies, trying to restructure them to make them competitive

manufacturing costs

firms often pursue ___ as a pricing objective when industry sales are relatively flat or declining

market share

a marketing manager considers pricing objectives and constraints to

narrow the range of choices among the variety of pricing strategies

a firm may set goals for its business in terms of profit, sales, or unit volume. these are types of pricing ___

objectives

if loyalty toward a particular brand makes other brands seem less substitutable, it decreases

price elasticity of demand

patents and limited competition reduce ____, making high prices possible for technology products early in their life cycles

pricing constraints

what factors cause price inelasticity

products are considered necessities few available substitutes

which competitive market doesn't provide a pricing constraint for the marketer

pure monopoly

a pricing objective of increasing sales can have the disadvantage of leading to price cuts that

reduce the revenues of other products in the firm's line

firms that set ___ objectives believe that increased revenues will in turn lead to increases in market share and profit

sales

when a company sets a profit goal of 20% for pretax ROI, it is using which type of pricing objective

target return

strategies that can be used as part of a firm's profit objectives include

target return maximizing current profits

in an oligopoly, price wars only benefit

the consumer

price simultaneously affects

total revenue and total cost

unit variable cost =

total variable cost / quantity

the pricing objective known as ____ can be counterproductive if it is achieved by drastic price cutting that drives down profit

unit volume

direct labor and materials are also known as

variable costs