Quiz 2/24 Flashcards

1
Q

Price

A

The amount of money exchanged fro products and services

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2
Q

Price vs. Value

A

Price is what the consumer pays

Value is what the consumer receives

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3
Q

Value Equation

A

Value = Perceived Benefits / Price

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4
Q

Six Steps in Setting Price

A
  1. Identify Pricing Objectives and Constraints
  2. Estimate Demand & Revenue
  3. Determine Cost, Volume, and Profit
  4. Select an Approximate Price Level
  5. Set the price
  6. Make special adjustments
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5
Q

Market Share equation

A

Firm’s Sales / Total Market Sales

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6
Q

Are necessities and luxuries inelastic or elastic?

A

Necessities are inelastic

Luxuries are elastic

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7
Q

Total Cost equation

A

Total Cost = Fixed Cost + Variable Cost

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8
Q

Contribution Margin equation

A

Contribution Margin = Price - Variable Cost

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9
Q

Breakeven Point equation

A

Breakeven Point = Fixed Cost / Contribution Margin

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10
Q

Approaches for selecting an approximate price:

A

Competition oriented

Cost oriented

Profit oriented

Demand oriented

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11
Q

Skimming Approach

A

High price to normal price (Ex. Apple)

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12
Q

Penetration Approach

A

Low price to increased price (Ex. Amazon)

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13
Q

Prestige Approach

A

High price, stays high (Ex. Rolex)

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14
Q

Factors that affect value and price customization:

A

Tastes
Nature of use
Intensity of use
Competition

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15
Q

Dynamic Pricing and what could go wrong

A

Changing the price frequently based on supply and demand.

Could lead to loss of trust and customers feeling used.

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16
Q

Types of discounts and allowances:

A

Quantity discounts
Seasonal discounts
Cash discounts
Promotional Allowances