Business Chapter 14 Study Guide.docx
SchoolSimon Fraser University
Course CodeBUS 201
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•Deciding what the company will receive in exchange for its product
Pricing to meet business objectives
oMarket share pricing
A company’s percentage of the total market sales for a specific product
Price setting tools
oTakes into account the need to cover production costs
•Break-even analysis: Cost-volume-profit relationships
Those costs that change with the number of goods or services produced
Those costs unaffected by the number of goods or services produced or
An assessment of how many units must be sold at a given price before
the company begins to make a profit.
The number of units that must be sold at a given price before the
company covers all of its variable and fixed costs.
•Pricing existing products
oSet either above, below, or at the market price
•Pricing new products
The decision to price a new product as high as possible to earn the
maximum profit on each unit sold
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The decision to price a new product very low to sell the most units
possible and to build customer loyalty.
•Fixed versus dynamic pricing
oThe practice of offering all items in certain categories at a limited number of
predetermined price points
oThe practice of setting prices to take advantage of the illogical reactions of
consumers to certain types of prices
oA form of psychological pricing in which prices are not even stated in dollar
oAny price reduction offered by the seller to persuade customers to purchase a
•The combination of distribution channels a firm selects to get a product to end-users
Intermediaries and distribution channels
oAny individuals or firms other than the producer that participate in a product’s
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