MGT 103 Bates Final questions and answers 100% correct

MGT 103 Bates Final questions and answers 100% correct __% of ticket sales are now Online 50 Price the money or other considerations (think: bartering) exchanged for the ownership or use of a product or service Barter exchanging products and services for other products and services Calculating the Final Price (Formula) List Price - (Incentives + allowances) + Extra Fees College Student ex. Tution - scholarships + books/housing Value (Formula) Percieved Benefits / Price Value Pricing (strategy) Lowering price while keeping benefits the same or Increasing benefits while keeping price the same Price to Value Relationship When we pay a higher price, we tend to perceive a higher quality doesn't mean that people will always be willing to pay a higher price though. ex) pizza sales example Profit (Formula) Total Revenue - Total Cost broken down further: (Unit Price x Quantity Sold) - (Fixed Cost + Variable Cost) Potential Pricing Objectives - Sales Revenue - Market Share - Unit Volume - Survival - Social Responsibility Sales Revenue Price x Quantity sold, money made before factoring in costs Market Share Ratio of a firms sales to the industry - used when sales in an industry are flat or declining Unit Volume total amount sold - used when trying to bring up consumer demand to match production capacity Survival the process of staying alive - used when a firm cant match rivals price cuts Social Responsibility when a firm forgoes greater profits to meet obligations to society Pricing Constraints Demand Newness Cost of Production whether Single Product or Product Line Cost of Changing prices Type of competitive market Demand the greater the demand, the higher price that can be charged Newness products can be sold for higher prices earlier in their life cycles Cost of Production firms are forced to price products in a way that ensures their distribution partners profit as well Single Product vs Product line single/unique products can be sold for higher price when a company has a range of similar products they kind of have to stay in line with eachother, price wise Cost of Changing Prices cost of updating online sites, catalog retail avenues, etc. Pure Competition market many sellers and consistent market price (Agriculture- Wheat/Corn) same benefit of corn, price is determined by what consumers want to pay Monopolistic Competition many sellers compete on both price, and benefits (books movies restaurants) there isnt a consistent price (there is a price range, though) like pure competition since there are differentiated benefits Oligopoly few sellers that avoid price competition and focus on differentiated benefits (car manufacturers/banks) Pure Monopoly No price competition and the seller can charge mostly what it wants (cable TV) Every Day Low Prices gives customers a low price 24/7 365. No discounts, no need for comparison shopping High/Low pricing Initially sells a product for high price, then later sells on discount for low when the product becomes undesirable Odd/Even pricing 9.98 vs 10 Both are desirable, depending on how the firm wants the product to be perceived as (cheap vs premium) Bundle Pricing Marketing two or more products together as a single package (get more people to buy fries by throwing in a drink) Yield Management Charging different prices to maximize revenue prices change depending on capacity (Hotels/airlines) Standard Markup adding a fixed percentage to the cost of all items in a specific product class (tends to be 10/20/40, manufacturing/wholesaler/retailer, where percentage additions are calculated ontop of each other, not all at once) Cost Plus Pricing summing the total unit cost of providing a product or service and adding a specific amount to the cost in order to arrive at a price ex. how a contractor will charge a percentage of the cost of all goods as his own fee Customary Pricing Going rate pricing (products that have a history of going for a specific price, like 99c candybars) Above/At/Below Market attempting to be premium, competitive, or a value product in a market Loss Leader Pricing selling a product below market rate in an attempt to get customers to buy products with higher margins ex) HP printer sales--> HP ink sales Fixed Price Policy No variation in price. All buyers pay the same (Carmax) Dynamic Pricing Pricing changes in real time depending on market supply/demand (Car dealership MSRP) Asymmetric Dominance ORANGE/ APPLE / ROTTEN APPLE regular apple will be percieved to be most desirable bc of presence of rotten apple also the economist subscription example Marginal Analysis Examining the trade-offs between incremental costs and incremental revenues i.e) how many units must i sell for this advertisement to be worth it? Channel Price Adjustments Discounts, allowances, geographical adjustments Discounts Quantity - BOGO Seasonal - Encourage buyers to buy items before normal demand suggests Cash Discounts - Encourage a buyer to pay bills more quickly - ex) discount on early payments, interest on late ones Allowances Trade-in - accepting used product as part of payment towards new one Promotional Allowances - cash/extra product awarded to SELLERS, who then pass on savings to consumer to stimulate demand Geographical Adjustments Free on Board origin Pricing - seller pays for loading cost onto transport. Buyer chooses and pays for method of transport Uniform Delivered Pricing - seller quotes a price that included transportation costs. Retains title to goods until delivered Showrooming using brick and mortar store to experience products before searching for lower prices online AD Matching matching price on any competitors ad (walmart) competitive price matching (best buy )matches both online and store ads Price fixing conspiracy among firms to set prices for a product (illegal) Horizontal Price Fixing when two or more firms explicitly/implicitly set prices at the same point Vertical Price Fixing pricing agreements between parties at different levels of the distribution channel - sellers are required to not sell products below a minimum retail price (illegal) - Manufacturers may set an MSRP or a maximum price to be charged because it is not considered anti competitive (legal) Deceptive Pricing intentionally misleading consumers - bait and switch - bargains conditional on other purchases ( legal if first item is sold at regular price) - false comparable values (cant advertise a retail value w/o evidence, like when ads on tv say retail value 100 we're selling for 50) - Former Price Comparisons: there must have been a good faith effort to sell product at an "original price", you cant just set an items price to be high initially, then immediately discount it Demand Factors (move curve) -consumer tastes, -consumer income Shift in demand curve advertising -> consumer tastes larger distribution rise in consumer income increased competitior prices Total Revenue TR = price x quantity sold Average Revenue AR = TR/Q where Q is quantity sold Marginal Revenue change in total revenue over change in quantity sold measured by increasing one unit Price Elasticity of Demand measure of the sensitivity of consumer demand to a change in price Elastic Demand 1% change in price produces more than 1% change in quantity demanded inelastic demand 1% change in price produces less than 1% change in quantity demanded Total Cost total expense incurred in producing and marketing a product Fixed cost sum of expenses that are stable and do not change with quantity of product produced and sold Variable cost sum of expenses that vary directly with quantity of a product that is sold (material/labor) Unit variable cost variable cost per unit Marginal Cost change in cost that results from producing and marketing one additional unit of a product Marginal Analysis analyzing tradeoff of incremental costs vs incremental revenues Break Even Analysis identifying a quantity break even point where profit (TR - TC) is 0 Integrated Marketing Communications the process of using a wide range of promotional tools working together to build and maintain brand awareness, identity and preference -long term focus, utilized a promotional mix to target consumers in different ways: achieving brand exposure and conveying a brand message Promotion communications process in marketing that is used to create a favorable predisposition towards a brand of product or service Promotional Mix blend of communications tools used by a firm to carry out the promotion process and communicate directly with audiences