Download MBA 620 Final Assessment Exam: Price Setting and Pricing Strategies and more Exams Advanced Education in PDF only on Docsity!
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Price definition - ANSWER the money or other considerations (including other productsor services) exchanged for the ownership or use of a product or service
6 steps of price setting - ANSWER identify pricing objectives and constraints estimate demand and revenue determine cost, volume, and profit relationshipsselect an approximate price level set list or quoted price make special adjustments to list or quoted price step 1 in price setting - ANSWER identify pricing objectives and constraints step 2 in price setting - ANSWER estimate demand and revenue step 3 in price setting - ANSWER determine cost, volume, and profit relationships step 4 in price setting - ANSWER select an approximate price level step 5 in price setting - ANSWER set list or quoted price step 6 of price setting - ANSWER make special adjustments to list or quoted price pricing objectives definition - ANSWER specifying the role of price in an organization's
marketing and strategic plans types of pricing objectives - ANSWER profitsales market shareunit volume survival social responsibility profit pricing objective - ANSWER measured in terms of ROI or ROA (assets) 3 types managing for long-run profit (profit type pricing objective) - ANSWER give up immediateprofit to penetrate competitive markets >> products priced low compared to cost to develop, but the firm expects to make profits d/t its high market share maximizing current profit (profit type pricing objective) - ANSWER targets set andmeasured quickly (quarterly or annually)
target return (profit type pricing objective) - ANSWER occurs when a firm sets a profitgoal, usually determined by board of directors
sales pricing objective - ANSWER increase sales revenue market share pricing objective - ANSWER the ratio of the firm's sales revenue or unitsales to those of the industry (competitor plus the firm itself)
often pursued when industry sales are flat or declining
marginal cost definition - ANSWER the change in total cost that results from producingand marketing one additional unit of a product MC=(Change in TC/Change in Qty) break-even analysis - ANSWER a method that determines the level of output at whichtotal revenue equals total cost, showing the various levels of profit and loss
break-even point (BEP) - ANSWER the level of output where total revenue equals totalcost
BEP (Qty) = FC/(Unit Price-Unit VC) break-even chart ANSWER a graphical representation of the break-even analysis thatreveals at what point total revenue and total cost intersect to determine profit or loss for a particular quantity sold pricing constraints of pure competition ANSWER very little price competition - marketdetermines price
pricing constraints of monopolistic competition ANSWER some price competition -compete within a range of prices
pricing constraints of oligopoly - ANSWER some price competition - price leader orfollower of competitors
pricing constraints of pure monopoly - ANSWER no price competition - sole seller setsprice
price skimming - ANSWER setting the highest initial price that customers really desiringthe product are willing to pay when introducing new or innovative product
price penetration - ANSWER setting a low initial price on a new product to appealimmediately to mass market
conditions favorable to price penetration - ANSWER many market segments are pricesensitive low initial price discourages competitors from entering the market unit production and marketing cost fall dramatically as production volume increase what does target pricing consist of? - ANSWER estimating the price that ultimateconsumers would be willing to pay working backwards through markups taken by retailers and wholesalers to determinewhat price to charge wholesalers and then, deliberately adjusting the composition and features to achieve the target price loss-leader pricing - ANSWER deliberately selling a product below customary price, notto increase sales, but to attract customers' attention to it in hopes they will purchase other items as well dynamic pricing policy benefits - ANSWER charging different prices for products andservices, right at the moment, depending upon the supply and demand situations
5 pricing practices investigated - ANSWER price fixing price discrimination deceptive pricinggeographical pricing predatory pricing price fixing - ANSWER a conspiracy by the firms about the price of a product
ex. candy, magazines, etc. when is an agent added? - ANSWER added when there are many small manufacturersand many small retailers, used to coordinate a large supply of product
dual distribution - ANSWER an arrangement whereby a firm reaches different buyers byemploying two or more different types of channels for the same basic product
ex. GE sells directly to home & apartment builders, but uses retail to sell to ultimateconsumers
major types of vertical marketing systems - ANSWER corporate contractual (most common) administered vertical marketing system - ANSWER professionally managed and centrally coordinatedmarketing channels designed to achieve channel economies and maximum marketing impact example of corporate vertical marketing system - ANSWER polo/ralph lauren types of contractual vertical marketing systems - ANSWER wholesaler-sponsoredvoluntary chains (ben franklin) franchise program retailer-sponsored cooperatives(associated grocers)
franchise program types - ANSWER manufacturer-sponsored retail franchise system (ford) manufacturer-sponsored wholesale franchise system (pepsi-cola) service-sponsored retail franchise system (holiday inn) service-sponsored franchise system (H&R block) eight second rule - ANSWER consumers will abandon their efforts to enter or navigate awebsite if download time exceeds 8 seconds
examples of horizontal conflict - ANSWER arises when a manufacturer increases itsdistribution in a geographical area dual distribution causes conflict when different types of retailers carry the same brands supply chain management - ANSWER the integration and organization of informationand logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to customers supply chain - ANSWER the various firms involved in the performing of activitiesrequired to create and deliver a product or service to ultimate consumers or industrial users 3 types of distribution - ANSWER intensive exclusive selective
intended receiver the receiver may not adequately convert the set of symbols to the correct abstract idea feedback may be so slow or distorted that it is useless to the sender source - ANSWER a company or person who has something to communicate during thecommunication process
message - ANSWER information the source sends to the receiver in the communicationprocess
receiver - ANSWER consumer who reads, hears, or sees the message coming from thesource in the communication process
encoding - ANSWER a process that involves having the sender change an idea into a setof symbols
decoding - ANSWER the process of having the receiver take a set fo symbols andtransform them back into an idea
field of experience - ANSWER a mutually shared understanding and knowledge that thesender and receiver apply to the message so that it can be communicated effectively
response - ANSWER in the feedback loop, the impact the message had on the receiver'sknowledge, attitudes, or behaviors
feedback - ANSWER in the feedback loop, sender's interpretation of the response,which indicates whether things transmitted correctly
noise - ANSWER extraneous factors that can work against effective communication examples of noise - ANSWER printing mistake that affects the meaning of a newspaperad
a misunderstood salesperson's message by a prospective buyer d/t accent, use ofslang, or communication style, etc.
disadvantages of personal selling - ANSWER expensive messages may vary between sales persons how much to pharmaceutical companies spend on direct-to-consumer - ANSWER > 3.4billlion annually
all you can afford budgeting - ANSWER allocating funds to promotion only after all otherbudget items are covered
promotional mix components that use mass appeal - ANSWER advertising public relationssales promotion
mass selling - ANSWER used with groups of prospective buyers customized interaction - ANSWER interactioon between a seller and prospective buyer advertising strengths - ANSWER efficient means or reaching large numbers advertising weaknesses - ANSWER high absolute costdifficult to receive feedback
stages of promotional planning - ANSWER planning -developing the program implementation - executing the programevaluation - evaluating the program
