Terms

MKT-MP-9 Utilize pricing strategies to maximize return and meet

customers’ perception of value.

MP-3rd period

PriceThe actual

amount that customers pay

and the methods of

increasing the value of the

product to the customers.

Economic UtilityThe amount of satisfaction a consumer receives from the consumption of a particular product or service.

Elastic Demand

Elastic demand is the market situation in which a

price decrease will increase total revenue.

IInneellaassttiicc DDeemmaannddMarket Market situationsituation in in

whichwhich a a price decreaseprice decrease will decrease will decrease total total

revenuerevenue..

Elasticity Of Demand

The relationship between changes in a product’s price

and the demand for that product, based on the number

of good substitutes for a product and the willingness of

consumers to go without a product if the price gets too

high.

Price discrimination

Businesses can not discriminate in the prices

they charge to other businesses in their

channel of distribution.

Price fixing is when business competitors Price fixing is when business competitors come together to set their prices to buy or come together to set their prices to buy or sell goods or at a certain price range or sell goods or at a certain price range or

point. point.

Price Advertising

Businesses cannot mislead consumers

through the advertising of prices. (Price at

which the product is sold). Companies must

also clearly communicate the terms

of credit offered to customers.

UNIT PRICING

The pricing of goods on the basis of cost per unit of measure.

Bait & Switch

Companies cannot lure customers with offers of low prices and then tell them the low price product is

unavailable or inferior.

A reduction from the original selling price.

Operating expenses are all costs associated with actual business operations.

Net profit

The difference between the selling price and all costs and operating expenses

associated with the product sold.

An amount added to the cost of

a product to determine the selling price.

Total Revenue

The anticipated quantity that will be

sold multiplied by the product price.

Breakeven pointBreakeven point

The quantity of a product that The quantity of a product that must be sold for total revenues to must be sold for total revenues to match total cost at a specific price.match total cost at a specific price.