MKT 300 Eaton Final

3 internal pricing factors - Answer-1) Marketing Objectives- maximize profit, gain market share etc. 2) Marketing Mix strategy- price consistent with 3Ps 3) Costs 3 EXTERNAL pricing factors - Answer-1) demand for your product 2) competition (competitors prices, stregntgh of competition) 3) economy- cost of components, economic conditions inelastic demand - Answer-means that an increase or decrease in price will not significantly affect demand. products that do not have many substitutes` Pricing Objectives - Answer-1) Profit- identify price and cost levels that allow the firm to maximize profit per product 2) status-quo: identify price levels similar to competitor average 3) Market share: adjust price levels so that the firm can maintain or increase sales relative to competitors sales cost-plus pricing - Answer-adding a specified dollar amount to the sellers costs. -markup: adding to the price of the product a predetermined percentage of the variable cost -margin: adding to the price a predetermined percentage of the total price break even quantity - Answer-total fixed costs / (selling price - variable cost) demand-based pricing - Answer-customers pay a higher price when demand for the product is strong and a lower price when demand is weak. -also known as Flexible or Variable pricing -off peak cheaper prices *happy hour*, different segments pay different rates *kids eat free* competition based pricing - Answer-pricing influenced primarily by competitors prices. Method importance increases when: -competing products are homogeneous resulting in elastic demand. -organization is serving markets in which price is a key consideration new product pricing - Answer-Price skimming- charging the highest possible price that buyers who desire the product will pay Penetration pricing- setting prices below those of competing brands to penetrate a market and