Pricing Strategies and Demand Analysis in Business

What does price mean to consumers?

The cost of something they want.

What does price mean to sellers?

Revenue.

What is the definition of price?

That which is given up in exchange to acquire a good or service, including time lost while waiting.

How is a reasonable price determined?

It is based on the perceived value at the time of transaction.

What is the formula for calculating revenue?

Revenue = price × number of units sold.

What must managers consider when establishing pricing objectives?

Product demand, costs, profits, competitive positioning, and economic conditions.

What is price elasticity of demand?

The degree of change in demand relative to changes in price.

What characterizes elastic demand?

Changes in price greatly change levels of demand.

What characterizes inelastic demand?

Changes in price have little or no impact on demand.

What is break-even analysis?

A method to determine how much a product must sell to cover its costs.

What is the break-even point formula?

BEP = Fixed cost / (Selling price - Variable cost per unit).

What are the three basic pricing strategies?

Price skimming, penetration pricing, and status quo pricing.

What is dynamic pricing?

A pricing strategy that adjusts prices based on supply and demand using technology.

What does value-based pricing focus on?

Determining the bundle of attributes consumers want and the value they place on them.

What is the impact of grocery competition on pricing?

It has led to value pricing, where consumers expect inexpensive products every day.

What is the role of discounts and allowances in pricing?

To fine-tune base prices and adjust for unforeseen market events.

What is the importance of establishing a price strategy?

It defines the initial price and intended direction of price movements over the product life cycle.

What factors influence the choice of a price strategy?

Market conditions and elements of the marketing mix.

What is the significance of price sensitivity?

It indicates how much the quantity sold changes in response to price changes.

What is the relationship between price and perceived value?

The price paid is based on the satisfaction consumers expect to receive from a product.

What are profit-oriented pricing objectives?

Objectives focused on maximizing profit through appropriate pricing.

What is the status quo pricing objective?

An objective to maintain existing pricing levels rather than changing them.

What are the components of cost estimation in pricing?

Variable costs and fixed costs.

What is the importance of historical data in demand estimation?

It helps predict future demand based on past trends.

What is the impact of the internet on pricing strategies?

It facilitates seamless comparison shopping, putting downward pressure on prices.