Price Flashcards

Question

Methods of estimating demand curve

Answer 1

Buyer surveys, Pricing experiments, Analyze sales data

Answer 2

slight decrease in price = large increase in demand thus slight increase in price = relatively large decrease in demand

Answer 3

slight increases or decreases in price will not significantly affect demand

Answer 4

weigh factors underlying expected customer tastes and preferences

Answer 5

consumers may use price as a measure of quality or prestige if price is lowered beyond a certain point demand for the item falls attracts quality or status conscious customers marketers strategy is to stay above initial price P0

Answer 6

a firm that is selling a line of products may price them at a number of different specific pricing points

Answer 7

setting pricing a few dollars or cents under an even number eg 499.99, 11.99 etc theory that decresing price from 500 to 499 increases demand as consumers see something that is over $400 rather than around $500

Answer 8

Estimating the price the ultimate consumer would be willing to pay for a product then working backwards through mark ups by retailers and wholesalers to determine a price they can charge the wholesalers

Answer 9

based on the idea that customers value the package over the individual products market two or more items in a single package price eg: Mcvalue meal at McD's

Answer 10

charging different prices to maximise revenue for a set capacity service firms engage in this, vary prices by time, day, week or season eg airline tickets and seats

Answer 11

a price setter stresses the cost side of the pricing problem not the demand side. price is set by looking at the production and marketing costs and then adding enough to cover direct expenses, overhead and profit

Answer 12

``` adding a fixed percentage to the cost of all items in a product class used by supermarkets or retailers with a large number of products ```

Answer 13

involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price

Answer 14

based on the learning effect in which the unit cost of many products and services declines by 10 - 30 % each time a firms experience in producing and selling them doubles can be mathematically estimated as it is predictable enough Eg: fax machines have decreased from $1k to less than $100

Answer 15

used to balance both revenues and costs | involves setting a target of a specific dollar volume or profit

Answer 16

firm sets an annual target of a specific volume of profit | needs to make assumptions on variable costs, fixed costs, demand, annual volume of units

Answer 17

used by firms such as supermarkets to set typical prices that will give them a profit that is a specified % of the sales volume

Answer 18

a method of setting prices to achieve an annual return on investment target. usually used by large, publicly owned corporations and public utilities

Answer 19

price setter stresses what competitors or the market are doing

Answer 20

used for products where distribution, or other competitive factors dictate the price a significant departure from the customary price can result in loss of sales for the manufacturer ways around it include what Hersheys did where they changed the amount of chocolate in its bar rather than its retail price.

Answer 21

use market benchmark then deliberately choose a strategy of above, at or below Eg Rolex takes pride in emphasizing that it makes one of the most expensive watches you can buy

Answer 22

for special promo, retail stores deliberately sell a product below its customary price to attract attention to it purpose is not to increase sales but to attract customers in the hope they will buy other products as well, particularly the discretionary items with large mark ups

Answer 23

1. Identify pricing objectives and constraints 2. Estimate demand and revenue 3. Determine cost, volume and profit relationships 4. Select an appropriate price level 5. Set list or quoted price 6. Make special adjustments to list or quoted price

Answer 24

performs a variety of functions including selling, stocking delivering a full product assortment and financing

Answer 25

independent retailer, corporate chain and contractual systems

Answer 26

independent business owned by an individual simple for the retailer : owner is the boss For customers it can offer convenience, personal service and lifestyle compatibility

Answer 27

multiple outlets under common ownership large chain can bargain with manufacturer for good, service of volume discounts consumer benefits as there are multiple chains and consistent management policies

Answer 28

independently owned stores that band together to act like a chain members can take advantage of volume discounts and may be more favorable to consumers

Answer 29

Self: customers perform many functions during purchase prosess eg self check in airports Limited: provide some services such as credit or merchandise return but customers are responsible for most shopping activities Full: include most specialty stores provide many services to customers

Answer 30

store carries a large assortment of each item such as shoe store which offers running shoes, dress shoes, kids shoes etc

Answer 31

variety of items a store carries such as appliances and books

Price Flashcards

(55 cards)