Pricing Flashcards
Identify the Internal factors affecting Price
- Costs (Fixed and Variable)
- Marketing Mix Strategy
- Marketing Objectives
Identify the External Factors affecting Price
- Competitors
- Market and demand
- Customer Value Perceptions
Identify the components of the Marketing Mix Strategy as it refers to Price
- Product design
- Distribution
- Psychological Pricing
- Promotion
Identify the 5 Marketing Objectives
in the contexts of Pricing
- Survival (low prices to cover variable and some fixed costs)
- Profit Maximisation (to produce maximum profit)
- Market skimming (highest price the market will bear then dropping the price)
- Market Share Leadership/ Penetration Pricing (lowest prices to become market share leader)
- Product Quality Leadership (charging more to cover better quality/performance)
Define Market Structure
The level of control a firm has over setting prices relative to external market forces
Define Elasticity
in the contexts of Pricing Strategy
The measure of responsiveness of purchasers and suppliers to changes in price
Explain Value Based Pricing
Setting prices based on the value placed on the good by the consumer
Advantage: - Can set prices that will maximize sales since they take consumers’ perception of value into account
Disadvantage: - Requires consumer research, which involves time and cost.
Explain Cost Based Pricing
Setting prices based on the costs associated with manufacturing, promoting and distributing the good or service
Advantages- simple- therefore popular
Disadvantages
No consideration for demand or competition.
Explain Cost-Plus Pricing
The practice of** adding a percentage/markup** to the base cost of a product to cover unassigned costs and make a profit
Explain Target Profit Pricing
The practice of setting a target profit and setting prices in order to acheive it
Define Pure Competition
A market structure characterized by a large number of small firms producing identical products, with no individual firm having significant market power.
Price is determined by market forces (supply and demand).
Define Monopolistic Competition
A market structure characterized by a large number of firms producing similar but differentiated products, allowing for non-price competition.
Firms have some control over prices due to product differentiation.
Define Monopoly
A market structure where a single firm dominates the entire market, being the sole provider of a particular product or service.
The monopolist has considerable control over prices.
Examples: Public utilities, patented drugs.
Define Oligopoly
A market structure characterized by a small number of large firms dominating the market, often producing identical or similar products.
Firms may engage in strategic pricing and competition.
