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Chapter 9

Marketing 2030 Chapter 9.docx

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MKTG 2030
Linda Reeser

CHAPTER 9What Does It CostMonetary and NonMonetary Priceso Price The value that customers give up or exchange to obtain a desired producto Bartering The practice of exchanging a good or service for another good or service of like valueo Operating Cost Costs involved in using a producto Switching Cost Costs involved in moving from one brand to anothero Opportunity Cost The value of something that is given up to obtain something elseDeveloping Pricing ObjectivesProfit Objectiveso Maximizing Profitso Achieving a Target level of profit growtho Achieving a desired net profit margino Marginal Analysis A method that uses costs and demand to identify the price that will maximize profitsSales or Marketing Share Objectives Pricing products to maximize sales or to attain a desired level of sales or market shareCompetitive Effect Objective Pricing that is intended to have an effect o the marketingefforts of competition Customer Satisfaction and Retention Objectives Pricing that is intended to maximize customer satisfaction and retentionImage Enhancement Objective Pricing intended to establish a desired image or positioning prospective customersPricing StrategiesPricing Strategies to Achieve Profit Objectiveso Cost based Pricing Strategies Cost Plus Pricing A method of setting prices in which the seller totals all the unit costs for the product and then adds the desired profit per unit Price Floor Pricing A method for calculating prices in which to maintain full plan operating capacity a portion of a firms output may be sold at a price that covers only marginal costs of productiono Demand Based Pricing A price setting method based on estimates of demand at different productsDemand Curve A plot of the quantity of a product that customers will buy in a market during a period of time at various prices if all other factors remain the same Target Cost Pricing Target Costing A process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed the product is manufactured only of the firm can control costs to meet the required price Yield Management Pricing A practice of charging different prices to different customers in order to manage capacity when maximizing revenues Variable Pricing A flexible pricing strategy that reflects what individual consumers are willing to pay Skimming Price Charging a very high premium price for a new product
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