MGT 103 STUDY FINAL
6 Steps in setting price - ANS(1) identify pricing objectives and constraints, (2) estimate demand
and revenue, (3) determine cost, volume, and profit relationships, (4) select an approimate price
level, (5) set list or quoted price, (6) make special adjustments to list or quoted price
Fundamental revenue concepts - ANSDemand Curves and Revenue = (Change in Quantity
Demanded) / (Change in Price)
Break even point - ANSthe number of sales a business must achieve to generate a zero
operating profit, calculated as fixed costs divided by the contribution margin
Break Even Analysis - ANStotal fixed costs / (price of one unit-variable costs of one unit)
Revenue - ANSRevenue is the money you collect
for things you sell. Revenue is equal
to Unit Sales x Price of each unit.
A sports franchise has a number of
revenue sources, including: ticket sales,
concessions, licensing and sponsorships.
Total Revenue - ANSPrice x Quantity
Average Revenue - ANSTotal revenue received divided by the number of units sold. Usually,
price is equal to average revenue.
Marginal Revenue - ANSThe change in total revenue that results from the sale of 1 additional
unit of a firm's product; equal to the change in total revenue divided by the change in the
quantity of product sold
Movement Demand Curve - ANSWhen the price of a good increases (decreases), the quantity
demanded of a good decreases (increases), other factors constant (ceteris paribus) and this
results in a...
Shift Demand Curve - ANSThe change that takes place in a demand curve corresponding to a
new relationship between quantity demanded of a good and price of that good. The shift is
brought about by a change in the original conditions.
Price elasticity - ANSIs the demand of an economic measure to how much the quantity of a
good demanded changes when the price changes. Equation: percentage change in quantity
sold divided by the percentage change in price (% change in quantity(demand) sold/% change
in price)
, Demand-Oriented approaches - ANSSkimming, penetration, prestige, pricing lining, odd-even,
target, bundle, yield management
Skimming pricing - ANSsetting the highest initial price that customers really desiring the product
are willing to pay.(new or innovative)
Penetration pricing - ANSsetting a low initial price on a new product to appeal immediately to
the mass market
Prestige pricing - ANSinvolves setting a high price so that quality- or status-conscious
consumers will be attracted to the product and buy it.
Loss-leader pricing - ANSdeliberately selling a product below its customary price not to increase
sales but to attract customers attention in hopes that they will buy other products as well
Price Lining - ANSsetting a limited number of prices for a line of products; establishing price
points between products in a product line; used to communicate differences in quality and/or
service to consumers.
Franchise - ANScontract allowing operation under an established name in exchange for
royalties
Supply Chain - ANSThe connected chain of all of the business entities, both internal and
external to the company, that perform or support the logistics function
Total Logistics cost Factors - ANSMaterials handling, warehouse costing, order processing,
inventory costs, stockout costs, transportation costs
Customer service Factors - ANSTime, dependability, communication, convenience
Marketing channel - ANSindividuals and firms involved in the process of making a product or
service available for use or consumption by consumers or industrial users
Vertical marketing systems - ANSProfessionally managed and centrally coordinated marketing
channels designed to achieve channel economies and maximum marketing impact
Dual distribution - ANSan arrangement whereby a firm reaches different buyers by employing
two or more different types of channels for the same basic product
Intensive distribution - ANSa form of market coverage whereby a product is made available in
as many outlets as possible
6 Steps in setting price - ANS(1) identify pricing objectives and constraints, (2) estimate demand
and revenue, (3) determine cost, volume, and profit relationships, (4) select an approimate price
level, (5) set list or quoted price, (6) make special adjustments to list or quoted price
Fundamental revenue concepts - ANSDemand Curves and Revenue = (Change in Quantity
Demanded) / (Change in Price)
Break even point - ANSthe number of sales a business must achieve to generate a zero
operating profit, calculated as fixed costs divided by the contribution margin
Break Even Analysis - ANStotal fixed costs / (price of one unit-variable costs of one unit)
Revenue - ANSRevenue is the money you collect
for things you sell. Revenue is equal
to Unit Sales x Price of each unit.
A sports franchise has a number of
revenue sources, including: ticket sales,
concessions, licensing and sponsorships.
Total Revenue - ANSPrice x Quantity
Average Revenue - ANSTotal revenue received divided by the number of units sold. Usually,
price is equal to average revenue.
Marginal Revenue - ANSThe change in total revenue that results from the sale of 1 additional
unit of a firm's product; equal to the change in total revenue divided by the change in the
quantity of product sold
Movement Demand Curve - ANSWhen the price of a good increases (decreases), the quantity
demanded of a good decreases (increases), other factors constant (ceteris paribus) and this
results in a...
Shift Demand Curve - ANSThe change that takes place in a demand curve corresponding to a
new relationship between quantity demanded of a good and price of that good. The shift is
brought about by a change in the original conditions.
Price elasticity - ANSIs the demand of an economic measure to how much the quantity of a
good demanded changes when the price changes. Equation: percentage change in quantity
sold divided by the percentage change in price (% change in quantity(demand) sold/% change
in price)
, Demand-Oriented approaches - ANSSkimming, penetration, prestige, pricing lining, odd-even,
target, bundle, yield management
Skimming pricing - ANSsetting the highest initial price that customers really desiring the product
are willing to pay.(new or innovative)
Penetration pricing - ANSsetting a low initial price on a new product to appeal immediately to
the mass market
Prestige pricing - ANSinvolves setting a high price so that quality- or status-conscious
consumers will be attracted to the product and buy it.
Loss-leader pricing - ANSdeliberately selling a product below its customary price not to increase
sales but to attract customers attention in hopes that they will buy other products as well
Price Lining - ANSsetting a limited number of prices for a line of products; establishing price
points between products in a product line; used to communicate differences in quality and/or
service to consumers.
Franchise - ANScontract allowing operation under an established name in exchange for
royalties
Supply Chain - ANSThe connected chain of all of the business entities, both internal and
external to the company, that perform or support the logistics function
Total Logistics cost Factors - ANSMaterials handling, warehouse costing, order processing,
inventory costs, stockout costs, transportation costs
Customer service Factors - ANSTime, dependability, communication, convenience
Marketing channel - ANSindividuals and firms involved in the process of making a product or
service available for use or consumption by consumers or industrial users
Vertical marketing systems - ANSProfessionally managed and centrally coordinated marketing
channels designed to achieve channel economies and maximum marketing impact
Dual distribution - ANSan arrangement whereby a firm reaches different buyers by employing
two or more different types of channels for the same basic product
Intensive distribution - ANSa form of market coverage whereby a product is made available in
as many outlets as possible
