Pricing Theory and Strategies: Definitions and Concepts, Quizzes of Introduction to Business Management

Download Pricing Theory and Strategies: Definitions and Concepts and more Quizzes Introduction to Business Management in PDF only on Docsity! TERM 1 define price DEFINITION 1 a measure of value for buyers and sellers TERM 2 determining price objectives DEFINITION 2 profitability ROI: profit required to justify investment sales> costs long-termprosperity long-term> short-term profits market share aggressive to defend or acquire market share positioning higher price = exclusive positioning TERM 3 demand and demand based pricing DEFINITION 3 demand the relationship between price and quantity that consumers are willing and able to buy demand-based pricing pricing based on demand, predict TERM 4 demand curve for prestige products DEFINITION 4 when price exceeds benefits of prestige and exclusivity the curve reverts to downward slope TERM 5 price elasticity DEFINITION 5 responsiveness of quantity demanded when there is a change in price%chg demanded/% chg in price TERM 6 cost and revenue analysis: define price and loss leader DEFINITION 6 price leader pricing products at cost with the assumption consumers will purchase more normally priced items loss leader pricing products below cost with the assumption consumers will purchase normally priced goods TERM 7 cost and revenue analysis: break even DEFINITION 7 volume of sales that covers total costfixed costs/(price per unit -variable) TERM 8 cost and revenue analysis: marginal analysis DEFINITION 8 effect on costs and revenues when producing and consuming one extra unit of product average cost initially falls, eventually average costs increases maximised profit when marginal cost = marginal revenue TERM 9 cost and revenue analysis: pricing based on cost DEFINITION 9 1.cost-based pricing costs are determined by price, % or $ value added to the cost of the product to determine its selling price cost-plus pricing usually for large projects where it is difficult to determine the price until it is finished (construction, road, defence, legal) required profit margin is added as a $ or % to the costs once completed markup pricing for each intermediary (wholesalers and retailers) the product goes through a % is added onto costs to determine the selling price TERM 10 competition considerations DEFINITION 10 understanding competitor's pricing oligopoly: small no. large buyers selling undifferentiated products monopoly: one seller selling a unique product to the market perfectly competitive: a large number of buyers and sellers, undifferentiated product monopolistic competition: large number of sellers selling similar products, seek to differentiate