MKTG 361 Exam 2 2025

What is Price? What does it represent? - -Cost to the customer; represents value assessed by marketers products all have value and can be assessed on the ___ of price - -metric What makes price unique in the market mix? - -only part that generates revenue Revenue Generation - -Function of marketing mix that creates income Financial Price - -Measurement of value commonly used in product exchanges Profit Formula - -=Total revenue (price * quantity sold)- total costs Prestige Pricing - -emphasize quality; Setting high prices to create premium brand image Value Pricing - -Emphasizing bargains for price-conscious consumers Price Competition - -Strategically pricing based on competitor's pricing; products must be very similar What can a company achieve with lower pricing? - -increased sales/market share, brand awareness, customer loyalty What can result from a price war? - -caused by frequent and fierce price changes to boost market share; risk of reduced profits what can a company achieve with a higher price? - -unique value proposition What does a Demand Curve show? - -Shows relationship between price and quantity demanded What is the X and Y axis of a demand curve? - -x-price y-quantity demand curve is combined with ___ curves to find the _____ - -supply; equilibrium price equilibrium price - -price buyers and sellers are both willing to offer What does D1 represent? - - What would cause a shift to D2? - -more/less quantity demanded MKTG 361 MKTG 361 (T/F) Some organizations anticipate demand fluctuations and develop new products and prices to meet customers' changing needs. - -true 4 factors that influence demand? - -1. Changes in buyers' needs 2. Variations in the effectiveness of other marketing-mix variables 3. Presence of substitutes 4. Dynamic environment Price Elasticity of Demand - -Measures sensitivity of quantity demanded to price changes Formula for price elasticity - -%ΔQuantityDemanded / %ΔPrice Fixed Costs - -Expenses unaffected by changes in units produced Variable Costs - -Expenses varying with units produced Marginal Cost - -Cost of producing one additional unit Marginal Revenue - -Change in total revenue from selling one more unit Break Even Point - -Costs equal revenue from selling product Contribution Margin - -Selling price per unit minus variable cost per unit Cost-based pricing - --setting price based on costs of producing Customer Value Based Pricing - -Pricing based on buyer perception, not seller cost market-skimming pricing - -setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales market penetration pricing - -setting a low price for a new product in order to attract a large number of buyers and a large market share Pricing for a product mix is challenging because each product within the mix has different ___, ___, & ___. - -demand, cost, and competitors. product line pricing - -setting price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices; success lies in catering to customer segment MKTG 361 MKTG 361 optional product pricing - -pricing optional or accessory products along with the main product. A strategy where you sell your core product at a low cost and then encourage consumers to buy more accessories, features, or complementary products captive product pricing - -strategy devised to attract a large volume of customers to a one-time purchase of a lower-priced core (or main) product that requires accessory (or captive)products for the main product to function. Product bundle pricing- - -seller combines several products and offer bundle at reduced price by-product pricing - -setting a price for by-products in order to make the main product's price more competitive (If the by-products have no value and if getting rid of them is costly, this will affect the pricing of the main product.) Cash discount- - -price reduction for who pays bills promptly Quantity discount- - -price reduction to buyers who buy large volumes Seasonal discount- - -price reduction to buyers who buy merch out of season Allowances- - -reduction from list price Customer-segment pricing - -different customers pay different prices for same product; ex students and elderly Product form pricing - --different version priced differently; ex airplane seat Time based pricing - -- changes price by season, month, day, hour Psychological pricing- - -sellers considers psychological behind how consumers value product promotional pricing - -- temporarily price products below list price to create buying excitement Predatory pricing - -- undercutting; intent to set price low so other firms cannot compete Location based pricing - -- different cost for different locations Price discrimination- - -price differentials that injure competition by giving buyers advantages Deceptive pricing- - -false or misleading statements to persuade buyers that product is better deal than really is MKTG 361 MKTG 361 Price fixing- - -illegal agreement among competitors to raise or lower prices for benefit Personalized pricing- - -charge different prices to customers based on location, online history, browsing behavior Basing point pricing- - -seller selects given city as base point and charges all customers freight cost from that city FOB Origin pricing- - -goods placed on FOB carrier; customer pays freight Zone pricing- - -set up two or more zones; more distant the zone, higher price Uniform delivered pricing- - -charges same delivered price regardless of location Freight absorption pricing- - -seller absorbs all freight charges for market penetration dynamic pricing - -Strategy that adjusts product prices in real time based on market factors. what are cons of multi-channel retailing? - --inconsistent service -product availability upstream - -the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service downstream - -typically focus of marketers, look towards the customer - wholesalers and retailers Supply chain - -network of people and entities who are involved in creating a product and delivering it to its consumer. "Make-and-sell" Demand chain - -: planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating and delivering customer value. "Sense-and-respond." Value delivery network - -is made up of the company, suppliers, distributors, and, ultimately, customers who "partner" with each other to improve the performan