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Marketing Exam Study!

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    Fashion

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      A currently accepted or popular style in a given field

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    Fad

      • o

        A fashion that enters quickly, is adopted with a great zeal, peaks early, and declines very quickly

General Pricing Approaches

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    The price the company charges will be somewhere between one that is too low to produce a profit and one that is too high to produce any demand

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    Companies select prices by selecting a general pricing approach that includes one or more of these three sets of factors

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      Cost-Based Pricing

      • Adding standard mark-up to the cost of the product

      • Cost-plus pricing may not always be optimal if it ignores demand and competitor prices; however this approach remains popular and effective in many sectors

        • One advantage is that sellers are more certain about costs than demand, and so mark-up-based pricing is less risky

      • Another cost-oriented pricing approach is break-even pricing, or a variation called target profit pricing

        • Setting price to break even on the costs of making and marketing a product; or setting a price to make a target profit

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        Value-Based Pricing

        • Setting price based on buyers’ perceptions of value rather than on the sellers cost

        • Price is considered along with the other marketing mix variables before marketing program is set

        • Cost based pricing and value based pricing are reverse processes

        • Fig 10.5

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