Marketing, lecture 10 ass.prof. Skorobogatykh (Ph.D) 1 Slide 12-2 PRICING

of Plekhanov REA marketing department
Irina I.Skorobogatykh (Ph.D)

profit-oriented, and competition-oriented approaches to pricing

curve is and what price elasticity of demand means.

Explain the

has in setting prices and the constraints on the range

a Price?
Price
Barter

other considerations, including other goods and services, exchanged for the

Price

different purchases

Pricing
Profit Equation
Price as an Indicator of Value
Price in the

as follows:
Profit = Total Revenue – Total Cost or
Profit =

Profit Equation

an approximate price level

Pricing
Penetration Pricing
Prestige Pricing
Odd-Even Pricing

Pricing
Bundle Pricing
Yield Management Pricing

profit equation?
A: The profit equation is:
Profit = Total Revenue -

Concept Check

difference between skimming and penetration pricing?
A: A firm introducing a

Concept Check

pricing?
A: Odd-even pricing involves setting prices a few dollars or

Concept Check

Markup Pricing
Cost-Plus Pricing
Profit-Oriented Approaches
Target Profit Pricing
Target Return-on-Sales

Target Return-on-Investment Pricing

Pricing
Above-, At-, or Below-Market Pricing
Loss-Leader Pricing

Demand
Demand Curve
Consumer Tastes
Price & Availability of Similar

Consumer Income

number of products that will be sold at a given

Demand Curve

Demand
Movement Along vs. Shift of a Demand Curve
Elastic Demand
Price

Inelastic Demand

pricing?
A: For a special promotion, retail stores deliberately sell a

Concept Check

four demand factors that determine consumers’ willingness and ability to

A: They are price, consumer tastes, price and availability of similar products, and consumer income.

Concept Check

difference between movement along a demand curve and a shift

A: A movement along a demand curve occurs when the price is lowered and the quantity demanded increases (and vice versa), assuming that other factors remain unchanged. However, if these factors change, then the demand curve will shift.

Concept Check

Revenue
Total Revenue

money received from the sale of a product. Total revenue

Total Revenue

12-41
The Importance of Controlling Costs
Total Cost
Fixed Cost
Variable

expense incurred by a firm in producing and marketing the

Total Cost

sum of the expenses of the firm that are stable

Fixed Cost

sum of the expenses of the firm that vary directly

Variable Cost

12-43
Break-Even Analysis
Break-Even Point (BEP)
Applications of Break-Even Analysis
Calculating

Break-Even Chart

analyzes the relationship between total revenue and total cost to

Break-Even Analysis

difference between fixed costs and variable costs?
A: Fixed cost is

Concept Check

break-even point?
A: A break-even point (BEP) is the quantity at

Concept Check

Objectives
Pricing Objectives
Profit
Managing for Long-Run Profits
Maximizing Current

Target Return

of price in an organization’s marketing and strategic plans.
Pricing Objectives

Objectives
Sales
Market Share
Unit Volume
Survival
Social Responsibility

Constraints
Pricing Constraints
Demand for the Product Class, Product, and Brand
Newness of

limit the range of price a firm may set.
Pricing Constraints

Constraints
Cost of Producing and Marketing the Product
Competitors’ Prices
Legal and

Price Fixing

Price Discrimination

Deceptive Pricing

Predatory Pricing

difference between pricing objectives and pricing constraints?
A: Pricing objectives specify

Concept Check

and switch is and why it is an example of

A: This occurs when a firm offers a very low price on a product (the bait) to attract customers to a store, who then are persuaded to purchase a higher-priced item (the switch). Misleading consumers is both illegal and unethical.

Concept Check

Set an Approximate Price Level
One-Price Policy
Step 2: Set the

Flexible-Price Policy

Make Special Adjustments to the List or Quoted Price
Discounts

Seasonal Discounts

Trade (Functional) Discounts

Cash Discounts

Make Special Adjustments to the List or Quoted Price
Allowances

Promotional Allowances

Geographical Adjustments

FOB Origin Pricing

Uniform Delivered Pricing

seller choose a flexible-price policy over a one-price policy?
A: A

Concept Check

purpose of (a) quantity discounts and (b) promotional allowances?
A: (a)

Concept Check