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Marketing 6201 Chip Besio

Marketing 6201 Chip Besio. Quick-take quiz on price: Answers that are part numbers, part good judgment. ( d ) $2.7 trillion. ( b ) fixed cost. ( b ) gasoline. The “price” a buyer pays can take different names depending on what is purchased.

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Marketing 6201 Chip Besio

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  1. Marketing 6201 Chip Besio

  2. Quick-take quiz on price: Answers that are part numbers, part good judgment (d) $2.7 trillion (b) fixed cost (b) gasoline

  3. The “price” a buyer pays can take different names depending on what is purchased

  4. NATURE AND IMPORTANCE OF PRICEPRICE AS AN INDICATOR OF VALUE • Value = $ $ • Value-Pricing

  5. NATURE AND IMPORTANCE OF PRICEPRICE IN THE MARKETING MIX • Profit Equation Profit = Total Revenue – Total Costs = (Unit Price x Quantity Sold) – (Fixed Cost + Variable Cost) • Six Steps in Setting Price

  6. The six steps in setting price

  7. STEP 1: IDENTIFY PRICING OBJECTIVESAND CONSTRAINTSIDENTIFYING PRICING OBJECTIVES • Pricing Objectives • Profit • Managing for Long-Run Profits • Managing for Current Profit • Target Return (ROI) • “The World is Flattening” 13-7

  8. MARKETING MATTERSHow Flattening the World Affects Both Revenuesand Costs: Infosys…IKEA, and You!

  9. STEP 1: IDENTIFY PRICING OBJECTIVESAND CONSTRAINTSIDENTIFYING PRICING CONSTRAINTS • Pricing Constraints • Demand for theProduct Class (Cars),Product (Sports Cars),and Brand (Bugatti Veyron) • Newness of theProduct: Stage in theProduct Life Cycle eBay

  10. STEP 1: IDENTIFY PRICING OBJECTIVESAND CONSTRAINTSIDENTIFYING PRICING CONSTRAINTS • Single Product vs.a Product Line • Cost of Producing andMarketing a Product • Cost of ChangingPrices and Time PeriodThey Apply

  11. STEP 1: IDENTIFY PRICING OBJECTIVESAND CONSTRAINTSIDENTIFYING PRICING CONSTRAINTS • Type of Competitive Market • Pure Competition • Monopolistic Competition • Oligopoly • Pure Monopoly • Competitors’ Prices

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

  13. STEP 2: ESTIMATE DEMANDAND REVENUEFUNDAMENTALS OF ESTIMATING DEMAND • The Demand Curve • Consumer Tastes • Price and Availabilityof Similar Products • Consumer Income • Demand Factors

  14. STEP 2: ESTIMATE DEMANDAND REVENUEFUNDAMENTALS OF ESTIMATING DEMAND • Movement Along vs. aShift of Demand Curve • Movement Alonga Demand Curve • Shift in theDemand Curve 13-14

  15. Demand curve for Newsweek showing the effect on annual sales by a change in price caused by a movement along the demand curve

  16. Demand curve for Newsweek showing the effect on annual sales by a change in price caused by a shift of the demand curve

  17. STEP 2: ESTIMATE DEMANDAND REVENUEFUNDAMENTALS OF ESTIMATING REVENUE • Total Revenue (TR) • Average Revenue (AR) • Marginal Revenue (MR) • Demand Curves and Revenue

  18. How Newsweek’s downward-sloping demand curve affects total, average, and marginal revenues

  19. MARKETING MATTERSThe Airbus vs. Boeing Face-off—How Many Can We Sell and at What Price…in a $2.7 Trillion Market? • Marketingand Pricing • The Products • Demand

  20. Clothing and GasolineWhich product is more sensitive to price changes?

  21. STEP 3: DETERMINE COST, VOLUME,AND PROFIT RELATIONSHIPSTHE IMPORTANCE OF CONTROLLING COSTS • Total Cost (TC) • Fixed Cost (FC) • Variable Cost (VC) • Unit Variable Cost (UVC) • Marginal Cost (MC) • Marginal Analysis

  22. Fundamental cost concepts

  23. STEP 3: DETERMINE COST, VOLUME,AND PROFIT RELATIONSHIPSBREAK-EVEN ANALYSIS • Break-Even Analysis • Break-Even Point (BEP) _______Fixed Cost_________ ____FC____ BEPQuantity = Unit Price – Unit Variable Cost = P - UVC

  24. STEP 3: DETERMINE COST, VOLUME,AND PROFIT RELATIONSHIPSBREAK-EVEN ANALYSIS • Break-Even Chart • Applications ofBreak-Even Analysis

  25. Break-even analysis chart for a picture frame store shows the break-even point at 400 pictures

  26. Calculating a break-even point for the picture frame store shows its profit starts at 400 framed pictures per year

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