2023 AHIP EXAM 4 Eaton, Marketing 300, ASU

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2023 AHIP EXAM 4 Eaton, Marketing 300, ASU Internal Factors that Affect Pricing Decisions - ANS 1. Marketing Objectives 2. Marketing Mix Strategy 3. Costs Marketing Objectives - ANS -maximi... ze profit -gain market share -infer a level of quality -survive Marketing Mix Strategy - ANS price needs to be consistent with other 3P's (needs to reflect advertising, etc.) Costs - ANS your costs affect your profit, so set the optimal price External Factors that Affect Pricing Decisions - ANS 1. Demand for your product 2. Competition -competitors price -strength of competition 3. Economy - Cost of components (natural resources) - Economic conditions Price Elasticity - ANS How much demand for a product will change with a change in price e=(% change in quantity demanded of Good 'A') / (% change in price of Good 'A') Elastic - ANS consumers buy more or less of a product when the price changes Inelastic - ANS increase or decrease in price does not affect demand unitary elasticity - ANS An increase in sales exactly offsets a decrease in prices, and revenue is unchanged Stages for Establishing Prices - ANS 1. Develop pricing objectives 2. Assess target market's evaluation of price 3. Evaluate competitors' prices 4. Select a basis for pricing 5. Select a pricing strategy 6. Determine a specific price 1. Develop pricing objectives - ANS Profit- Identify price and cost levels that allow the firm to maximize profit per product Status Quo- Identify price levels similar to competitor average price Market Share- Adjust price levels so that the firm can maintain or increase sales relative to competitors' sales 2. assessing the target market's evaluation of price: importance of price - ANS -Type of Product -Type of Target Market -Purchase Situation 3. evaluating competitors' prices - ANS Sources of Competitors' Pricing Information -Comparative shoppers Importance of Knowing Competitors'Prices -Helps determine how important price will be to customers -Helps marketers in setting competitive prices for their products Customer View of Pricing and Marketing -Pricing above competition -Pricing below competition 4. selecting a basis for pricing - ANS Cost-plus pricing: adding a specified dollar amount to the seller's costs -Markup: Adding to the price of the product a predetermined percentage of the variable cost -Margin: Adding to the price of the product a predetermined percentage of the total price cost-based pricing: break-even pricing - ANS the break-even point is where a com Internal Factors that Affect Pricing Decisions - ANS 1. Marketing Objectives 2. Marketing Mix Strategy 3. Costs Marketing Objectives - ANS -maximize profit -gain market share -infer a level of quality -survive Marketing Mix Strategy - ANS price needs to be consistent with other 3P's (needs to reflect advertising, etc.) Costs - ANS your costs affect your profit, so set the optimal price External Factors that Affect Pricing Decisions - ANS 1. Demand for your product 2. Competition -competitors price -strength of competition 3. Economy - Cost of components (natural resources) - Economic conditions Price Elasticity - ANS How much demand for a product will change with a change in price e=(% change in quantity demanded of Good 'A') / (% change in price of Good 'A') Elastic - ANS consumers buy more or less of a product when the price changes Inelastic - ANS increase or decrease in price does not affect demand unitary elasticity - ANS An increase in sales exactly offsets a decrease in prices, and revenue is unchanged Stages for Establishing Prices - ANS 1. Develop pricing objectives 2. Assess target market's evaluation of price 3. Evaluate competitors' prices 4. Select a basis for pricing 5. Select a pricing strategy 6. Determine a specific price 1. Develop pricing objectives - ANS Profit- Identify price and cost levels that allow the firm to maximize profit per product Status Quo- Identify price levels similar to competitor average price Market Share- Adjust price levels so that the firm can maintain or increase sales relative to competitors' sales 2. assessing the target market's evaluation of price: importance of price - ANS -Type of Product -Type of Target Market -Purchase Situation 3. evaluating competitors' prices - ANS Sources of Competitors' Pricing Information -Comparative shoppers Importance of Knowing Competitors'Prices -Helps determine how important price will be to customers -Helps marketers in setting competitive prices for their products Customer View of Pricing and Marketing -Pricing above competition -Pricing below competition 4. selecting a basis for pricing - ANS Cost-plus pricing: adding a specified dollar amount to the seller's costs -Markup: Adding to the price of the product a predetermined percentage of the variable cost -Margin: Adding to the price of the product a predetermined percentage of the total price cost-based pricing: break-even pricing - ANS the break-even point is where a com [Show More]

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