MKT 300 Exam 4 Eaton ASU – Questions with Solutions
price - -the value that you exchange for the benefits of having or using the product/service
-value = - -benefits - costs
-internal factors on pricing decisions - -marketing objectives, marketing mix strategy,
costs
-marketing objectives - -to maximize profit
to gain market share
to infer a level of quality
to survive
-marketing mix strategy - -Price needs to be consistent with other 3P's (needs to reflect
advertising, etc.)
-costs - -your costs affect your profit, so set the optimal price
-external factors on pricing decisions - -demand for your product, competition, economy
-competition - -competitor's prices
strength of competition
-economy - -cost of components (natural resources)
economic conditions
-price elasticity - -tells us how much the demand for a product will change with a change
in price (% change in quantity demanded/% change in price)
-elastic demand - -a relatively small decrease in price results in a substantial increase in
quantity demanded
-inelastic demand - -a relatively large increase in price results in only a small decrease in
quantity demanded
-unitary elasticity - -an increase in sales exactly offsets a decrease in prices and revenue is
unchanged
-importance of price - -type of product, type of target market, purchase situation
-profit - -identify price and cost levels that allow the firm to maximize profit per product
-status quo - -identify price levels similar to competitor average price
, -market share - -adjust price levels so that the firm can maintain or increase sales relative
to competitors' sales
-sources of competitors pricing information - --comparative shoppers
-importance of knowing competitors prices - --Helps determine how important price will
be to customers
-Helps marketers in setting competitive prices for their products
-customer view of pricing and marketing - -pricing above competition
pricing below competition
-cost-plus pricing - -adding a specified dollar amount to the seller's costs
-markup - -adding to the price of the product a predetermined percentage of the variable
cost
-margin - -adding to the price of the product a predetermined percentage of the total price
-markup on selling price = - -(selling price - cost)/selling price
-selling price = - -cost/(1 - markup on selling price)
-break-even pricing - -a company produces the same amount of revenues as expenses
-break-even quantity = - -total fixed costs/selling price - variable cost
-demand-based pricing (flexible/variable pricing) - -customers pay a higher price when
demand for the product is strong and a lower price when demand is weak
-competition-based pricing - -pricing influenced primarily by competitors' prices
-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 gain a significant market share quickly
-everyday low prices - -setting a low price for products on a consistent basis
-reference pricing - -pricing a product at a moderate level and displaying it next to a more
expensive model or brand
-portfolio pricing - -Different levels of price points across a product category where
consumers are willing to pay more for extras
price - -the value that you exchange for the benefits of having or using the product/service
-value = - -benefits - costs
-internal factors on pricing decisions - -marketing objectives, marketing mix strategy,
costs
-marketing objectives - -to maximize profit
to gain market share
to infer a level of quality
to survive
-marketing mix strategy - -Price needs to be consistent with other 3P's (needs to reflect
advertising, etc.)
-costs - -your costs affect your profit, so set the optimal price
-external factors on pricing decisions - -demand for your product, competition, economy
-competition - -competitor's prices
strength of competition
-economy - -cost of components (natural resources)
economic conditions
-price elasticity - -tells us how much the demand for a product will change with a change
in price (% change in quantity demanded/% change in price)
-elastic demand - -a relatively small decrease in price results in a substantial increase in
quantity demanded
-inelastic demand - -a relatively large increase in price results in only a small decrease in
quantity demanded
-unitary elasticity - -an increase in sales exactly offsets a decrease in prices and revenue is
unchanged
-importance of price - -type of product, type of target market, purchase situation
-profit - -identify price and cost levels that allow the firm to maximize profit per product
-status quo - -identify price levels similar to competitor average price
, -market share - -adjust price levels so that the firm can maintain or increase sales relative
to competitors' sales
-sources of competitors pricing information - --comparative shoppers
-importance of knowing competitors prices - --Helps determine how important price will
be to customers
-Helps marketers in setting competitive prices for their products
-customer view of pricing and marketing - -pricing above competition
pricing below competition
-cost-plus pricing - -adding a specified dollar amount to the seller's costs
-markup - -adding to the price of the product a predetermined percentage of the variable
cost
-margin - -adding to the price of the product a predetermined percentage of the total price
-markup on selling price = - -(selling price - cost)/selling price
-selling price = - -cost/(1 - markup on selling price)
-break-even pricing - -a company produces the same amount of revenues as expenses
-break-even quantity = - -total fixed costs/selling price - variable cost
-demand-based pricing (flexible/variable pricing) - -customers pay a higher price when
demand for the product is strong and a lower price when demand is weak
-competition-based pricing - -pricing influenced primarily by competitors' prices
-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 gain a significant market share quickly
-everyday low prices - -setting a low price for products on a consistent basis
-reference pricing - -pricing a product at a moderate level and displaying it next to a more
expensive model or brand
-portfolio pricing - -Different levels of price points across a product category where
consumers are willing to pay more for extras
