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Value

ratio of perceived benefits to price

V=Perceived Benefits/Price

Demand Curve

a graph representing the quantity sold and price which shows the max number of units that will be sold at a given price

Price Elasticity of Demand

the percentage change in quantity demanded relative to a percentage change in price

Break Even Analysis

a technique used to analyze the relationship between revenue and total cost to determine the profitability at various levels of output

Value Pricing

practice of simultaneously increasing product and service benefits while maintaining or decreasing price

Profit is measured in terms of

Return on Investment (ROI) or Return on Assets (ROA).

Three Profit Objectives

1.) Managing for long-term profits

2.) Maximizing current profit objective

3.) Target Return (set for profit goal)

Elastic

When 1 percent price decrease generates more than 1 percent quantity increase.

Inelastic

When 1 percent price decrease produces less than 1 percent quantity increase.

Demand Factors

1.) Consumer Taste

2.) Price and availability of similar products

3.) Consumer Income

Skimming Pricing

set initial high price for customers that desire/are willing to pay when introducing new or innovative product

Penetration Pricing

setting a low initial price on a new product to appeal immediately to the mass market

Prestige Pricing

setting a high price so that quality-status-conscious consumers will be attracted to the product and buy it

Standard Markup Pricing

adding a fixed percentage to the cost of all items in a specific product class

Cost-plus pricing

summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price

Target Profit Pricing

setting an annual target of a specific dollar volume of profit

Target ROI

involves setting a price to achieve profit that is a specified percentage of the sales volume

Fixed Price Policy example

Apple Computer

Dynamic Pricing Policy example

Airfare, Airline Seating

Marketing Channel

consists of people and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users

Direct Channel

Producer -> Consumer

In-direct channel

Producer -> Retailers -> Consumers

Producer-> Wholesalers -> Retailers -> Consumers

Producer-> Agents ->Wholesalers -> Retailers -> Consumers

Supply Chain

consists of a sequence of firms that perform activities required to create and deliver a product or service to ultimate consumers or industrial users

Logistics

consists of the activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost