Ch 11 Flashcards
5 C’s of Pricing
Competition, costs, company objectives, customers, channel members
Demand curve
as price decreases, demand increases
Price Elasticity of Demand
how consumers respond to price increases or decreases
% change in QD/ % change in p
Break even point (units)
fixed costs / contribution per unit
Competition
Monopoly, monopolistic competition, oligopoly, pure competition
Monopoly
One firm controls the market
Oligopoly
A Handful of firms control the market
Monopolistic Competition
May firms selling differentiated products at different prices
Pure Competition
Many firms selling commodities for the same price
Pricing Methods & Strategies
cost based, value based, competitor based
Cost-Based Pricing Methods
Determines the final price to charge by starting with the cost.
Competitor-Based Methods
May set prices to reflect the way they want consumers to interpret their own prices relative to the competitor’s offerings.
Value-Based Methods
An approach to setting prices that focuses on the overall value of the product offering as perceived by the consumer
Pricing Strategies
Everyday Low Pricing (EDLP)
High/Low Pricing
New Product Pricing
Everyday Low Pricing (EDLP)
Companies stress the continuity of their retail prices at a level somewhere between the regular non sale price and the deep-discount sale prices that their competitors may offer
