Lecture Basic Marketing: A global managerial approach - Chapter 18: Price setting in the business world

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When you finish this chapter, you will: Understand how most wholesalers and retailers set their prices using markups, understand why turnover is so important in pricing, understand the advantages and disadvantages of average-cost pricing, know how to use break-even analysis to evaluate possible prices, know the many ways that price setters use demand estimates in their pricing.

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Nội dung Text: Lecture Basic Marketing: A global managerial approach - Chapter 18: Price setting in the business world

Chapter 18: Price Setting in the Business World For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Key Factors That Influence Price Setting Pricing objectives Price of other Price flexibility products in the line Discounts and Demand allowances Price settin g Cost Legal environment Geographic Competition pricing terms Markup chain in channels Exhibit 181 182 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Markup Chain and Channel Pricing 50.00 30.00 24.00 Markup = 20.00 = 40% Markup = 6.00 = 20% Markup = 2.40 = 10% Cost = 30.00 = 60% Cost = 24.00 = 80% Cost = 21.60 = 90% Producer Wholesaler Retailer Exhibit 182 183 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Six Types of Costs Total Cost Total Fixed Total Variable Cost Cost Average Average Fixed Cost Variable Cost Average Cost 184 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Prices Along the Demand Curve $3.00 Total revenue = Price x Quantity $30,000 = $3.00 x 10,000 $40,000 = $2.00 x 20,000 $57,000 = $1.90 x 30,000 Price per unit $66,000 = $1.65 x 40,000 $75,000 = $1.50 x 50,000 2.00 $72,000 = $1.20 x 60,000 1.90 1.65 1.50 1.20 10 20 30 40 50 60 70 Quantity (000) Exhibit 186 185 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Summary of Relationships Affecting Price Estimated quantity to ? be sold Quantity demanded Average fixed cost at selling price per unit Variable cost per unit Cost-oriented selling Average total cost price per unit per unit Profit per unit Exhibit 187 186 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Break-Even Analysis Higher Total Revenue and Cost Profit Area Total Revenue Curve Total Cost Curve Break-Even Point Loss Area Total Variable Costs Total Fixed Costs 0 More Units of Production Exhibit 188 187 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Demand-Oriented Pricing Psychological Odd-Even Bait Prestige Types of Demand-Oriented Leader Price Lining Pricing Value-in-Use Demand- Backward Reference 188 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Full-Line Pricing ????? Market- Market- or or Firm Firm Oriented? Oriented? ????? ????? Complementary Complementary Pricing? Pricing? ????? ????? Product-Bundling Product-Bundling Pricing? Pricing? 189 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.
Bid and Negotiated Pricing Bid pricing means offering a specific price for each possible job. Determining costs is a complicated process. Negotiated pricing involves setting a price as the result of a bargaining process between the buyer and seller. 1810 For use with Shapiro, Wong, Perreault, and McCarthy texts. Copyright © 2002 McGraw-Hill Ryerson Limited.