Marketing Ch.13 Flashcards Preview

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Flashcards in Marketing Ch.13 Deck (25):
1

Value

the ration of precieved benifits to price or value=benifits/price

2

value pricing

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

3

profit equation

profit=total revenue-total cost = (unit price*quantity sold)+(fixed cost + variable cost)

4

Pricing objectives

specifying the role of price in an organizations marketing and strategic plans

5

pricing constraints

the factors that limit the range of prices a firm may set

6

demand curve

graph relating the quantity sold and price

7

demand factors

factors that determine consumer's willingness and ability to pay for products and services

8

Total Revenue(TR)

TR=P*Q
P=unit price
Q=quantity sold
Total money recieved from the sale of a product

9

Average Revenue

is the average amount of money received for selling one unit of a product, or simply the price of that unit. Average revenue is the total revenue divided by the quantity sold:
AR=(TR)/Q = P

10

Marginal Revenue(MR)

is the change in total revenue that results from producing and marketing one additional unit of a product

MR=(change in TR)/(1 unit increase in Q)=(deltaTR/deltaQ)= slope of TR curve

11

Price Elasticity of Demand-

percent change in quantity demand relative to a percent change in price

(% change in quantity demanded)/(% change in price)

12

Elastic Demand

when a 1 percent decrease in price produces more than a 1% increase in quantity demanded (increasing sales revenue)

13

Inelastic Demand-

exists when a 1 percent decrease in price produces less than a 1% increase in quantity demanded (decreasing sales revenue)

14

Unitary Demand-

exists when the % change is identical

15

more substitues

more price elastic

16

product and services considere to be necessities

price inelastic

17

items that require a large cash outlay compared with a person's disposable income

price elastic

18

Total Cost TC

total expense incurred by a firm in producing/marketing a product
TC=FC+VC

19

Fixed Costs(FC)

sum of expenses of the firm that are stable and do not hcange with the quantity of a product that is produced and sold. (ie rent)

20

Variable Cost (VC

the sume of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

21

Unit Variable Cost (UVC)

vairable cost expressed on a per unit basis for a product
UVC=VC/Q

22

Marginal Cost (MC)

change in total cost that resuluts form producting ad marketing one additional unit of a product

MC=(change in TC/1 unit increase in Q)=(deltaTC/deltaQ)= slope of TC curve

23

Margnal Analysis

people will continue to do something as long as the incremental return exceeds the incremental cost

24

Break Even analysis

analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

25

Break even point

quantity at which total revenue=total cost
BEP=(fixed cost/(unit price-unit vairable cost))= FC/P-UVC