Marketing: Chapter 13

  1. Step 1
    identify pricing objectives
  2. pricing objectives
    specifying the role of price in an organization's marketing and strategic plans
  3. profit (three objectives)
    • 1. managing long run profits
    • 2. maximizing current profit
    • 3. generate profits in global market place
  4. Pricing Objectives (6)
    Profit, sales, market share, unit volume, survival, social responsibility
  5. Pricing Constraints (7)
    demand for product, newness of product, single product vs product line, cost of producing/marketing product, costs of changing prices/time period, competitive market, competitor's price
  6. Pure Competition
    market sets price, products are identical, little purpose is to inform prospects that seller's products are available
  7. Monopolistic Competition
    many sellers who compete on nonprice factors, some compete over range of prices, some differentiate products from competitors, much purpose is to differentiate firms products from competitors
  8. Oligopoly
    few sellers who are sensitive to each other's prices, some price leader or follower of competitors, various product differentiation, avoid price competition,
  9. Pure Monopoly
    one seller who sets the price for a unique product, no price competition, no other products (no need for differentiation)
  10. Step 2
    estimate demand and revenue
  11. the demand curve and its constraints
    graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price. consumer tastes, price and availability of similar products, consumer income
  12. an increase in demand
    shifts it to the right
  13. Elasticity of demand
    percentage change in quantity demanded relative to a percentage change in price (Q2-Q1)/(Q2+Q1/2) / (P2-P1)/(P2+P1/2)
  14. elastic demand
    1% decrease in price products more than a 1% increase in quantity demanded- increasing sales revenues
  15. Inelastic Demand
    1% decrease in price produces less than a 1% increase in quantity demanded, decreasing sales revenues
  16. a sweat is
  17. gas is
  18. more substitutes a product or service has, the more likely it is to be
  19. necessities are
    inelastic (open heart surgery)
  20. items that require a large cash outlay compared with a person's disposable income are
    elastic (cars, yachts where books are inelastic)
  21. step 3
    determine cost, volume and profit relationships
  22. marginal analysis
    continuing, concise trade-off of incremental costs against incremental revenues
  23. people will continue to do something as long as
    incremental return exceeds incremental costs
  24. break-even analysis
    analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. Fixed Cost/unit price-unit variable cost;
  25. for profit maximization you want
    MR = MC
Card Set
Marketing: Chapter 13
Chapter 13 Marketing Vocabulary Words