BUILDING BUILDING THE PRICE FOUNDATIONTHE PRICE FOUNDATION

BUILDING BUILDING THE PRICE FOUNDATIONTHE PRICE FOUNDATION

CHAPTER 13

•What is a Price? Barter

•Price as an Indicator of Value Value-pricing

•Price in the Marketing Mix Profit Equation

NATURE AND IMPORTANCE OF PRICE

The price of four different purchasesThe price of four different purchases

Steps in setting priceSteps in setting price

•Identifying Pricing Constraints• Demand for the Product Class, Product, and Brand

• Newness of the Product: Stage in the Product Life Cycle

• Single Product versus a Product Line

• Cost of Producing and Marketing the Product

• Cost of Changing Prices and Time Period They Apply

• Types of Competitive Markets Pure monopoly, Oligopoly, Monopolistic competition,

Pure competition

• Competitors Prices

STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES

Pricing, product, and advertising strategies available to firms in Pricing, product, and advertising strategies available to firms in four types of . . . marketsfour types of . . . markets

• Identifying Pricing Objectives• Profit

• Sales

• Market Share

• Unit Volume

• Survival

• Social Responsibility

STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES

Where each Where each dollar of your dollar of your movie movie ticket goesticket goes

Illustrative demand curves for Illustrative demand curves for NewsweekNewsweek magazine magazine

• Fundamentals of Estimating Revenue Total revenue Average revenue Marginal revenue

• Demand Curves and Revenue

• Price Elasticity of Demand

• Price Elasticity for Brands and Product Classes

STEP 2: ESTIMATE DEMAND AND SERVICE

Fundamental revenue conceptsFundamental revenue concepts

• The Importance of Controlling Costs Total cost

Fixed cost

Variable cost

•Break-Even Analysis Break-even point

STEP 3: DETERMINE COST, VOLUME, AND PROFIT RELATIONSHIPS

Calculating a break-even pointCalculating a break-even point

Break-even analysis chartBreak-even analysis chart