Welcome to Created for MKTG, 1st CDN Ed., by Lamb, Hair, McDaniel, Kapoor, Klaise, and Appleby Nelson Education Chapter 17 - Pricing Concepts Created by John T. Drea, Western Illinois University Click here to start

BasicTerms That’s Going to Cost You! Demand It! It! Potpourri Click on a point value to select a question Who Wants to Be a Marketer? Chapter 17 - Pricing Concepts Select another chapter Go to Final Challenge! PricingObjectives

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Basic Terms Answer: Revenue minus expenses. Question:What is profit? Back to the Answer Board!

Basic Terms Answer: It is given up by the buyer in any exchange to acquire a good or service. Question:What is price? (money) Back to the Answer Board!

Basic Terms Answer: It is the average price charged to a customer times the total number of units sold (i.e., price x units sold) Question: What is revenue? Back to the Answer Board!

Basic Terms Back to the Answer Board! Answer: It is the economic term used to describe the quantity of a product that will be offered to the market by suppliers at various prices over a specified period. Question:What is supply?

Basic Terms Answer: It is the term used to describe the practice of stocking well-known branded products at relatively high prices in order to sell store brands at discounted prices. Question: What is selling against the brand? Back to the Answer Board!

Pricing Objectives points Answer: This pricing strategy means setting prices so that total revenue is as large as possible relative to total costs. Question:What is a profit maximization pricing objective? Back to the Answer Board!

Pricing Objectives points Answer: This figure is calculated by dividing “net profits after taxes” by “total assets.” Question:What is return on investment? (return on assets) Back to the Answer Board!

Pricing Objectives points Answer: This strategy can be either unit- based or revenue-based. Question:What is a market share pricing strategy? Back to the Answer Board!

Pricing Objectives points Answer: Two examples of this broad category of pricing objectives are a market share strategy and a sales maximization strategy. Question:What are sales-oriented pricing objectives? Back to the Answer Board!

Pricing Objectives points Answer: Of the pricing objectives discussed in the text, it is the one characterized as a “passive” policy. Question:What is a status quo pricing objective? Back to the Answer Board!

That’s Going to Cost You – 100 points (Questions about costs and pricing) Answer: Examples of this category of costs are executive salaries and rent. (i.e., variable or fixed costs) Question:What are fixed costs? Back to the Answer Board!

That’s Going to Cost You – 200 points (Questions about costs and pricing) Answer: It is determined by dividing total costs by the quantity of output. Question: What is average total cost? (ATC) Back to the Answer Board!

That’s Going to Cost You – 300 points (Questions about costs and pricing) Answer:It is the change in total costs that comes from a one-unit change in output. Question:What is marginal cost? Back to the Answer Board!

That’s Going to Cost You – 400 points (Questions about costs and pricing) Answer: It is determined by dividing total variable costs by the quantity of output. Question: What is average variable cost? (AVC) Back to the Answer Board!

That’s Going to Cost You – 500 points (Questions about costs and pricing) Answer: It is what’s left after average variable cost (AVC) is subtracted from average total costs (ATC). Question:What are average fixed costs? (AFC) Back to the Answer Board!

Demand It! points Answer: This type of elasticity (i.e., elastic, inelastic, or unitary elasticity) encourages producers to charge higher prices. Question:What is inelastic? Back to the Answer Board!

Demand It! points Back to the Answer Board! Price $0 $10 $20 $ Quantity Demanded Per Week Supply Demand Answer: It is the amount of product that suppliers would be ready to place on the market at a price of $20 (click once for chart to appear) Question:What is 50 units/week?

Demand It! points Back to the Answer Board! Answer:It is the term used to describe an elasticity coefficient of (i.e., elastic, inelastic, unitary elasticity) Question:What is elastic?

Demand It! points Back to the Answer Board! Dollars Quantity Marginal Cost (MC ) Answer: It is the quantity on the following marginal cost curve that is the most attractive production level for a producer (click once for chart to appear) Question: What is 20 units?

Demand It! points Back to the Answer Board! Answer: An example of this type of elasticity (elastic, inelastic, or unitary elasticity) would be if a 10% decrease in price yielded a 10% increase in quantity demanded. Question:What is unitary elasticity?

Potpourri – 100 points Back to the Answer Board! Answer: It is the practice of charging a high price to help promote a high-quality image. Question:What is prestige pricing?

Potpourri – 200 points Back to the Answer Board! Answer: An example of this pricing objective would be having managers of Target visit Wal-Mart stores to compare prices and then make adjustments in Target’s pricing. Question:What is a status quo pricing objective?

Determine how much of your total you want to wager, then click below. Go to the Open Challenge Question!

Potpourri – Open Challenge Back to the Answer Board! Answer: Prices are frequently highest in this stage of the PLC due to firms attempting to recover development costs quickly. Question: What is the introduction stage?

Potpourri – 400 points Back to the Answer Board! Answer: According to the text, it is the reason why a sales maximization strategy should not be adopted as a long-run objective. Question:What is a negative influence on profits?

Potpourri – 500 points Back to the Answer Board! Answer: Doubling the cost of a product (100% markup over cost) to determine its selling price. Question:What is keystoning?

And now, it’s time for Directions: Get two pieces of paper. On one piece, write your team’s wager. Use the other piece of paper to write the “question” for the final challenge “answer.” Click here for the Final Challenge Answer

Final Challenge!!! Answer: It is the break-even quantity in units when total fixed costs are $1000, price is $25/unit, and the average variable cost is $15/unit. Question:What is 100 units? –BE units = Total fixed costs/(Price - AVC) –BE units = 1000/(25-15) = 1000/10 = 100 units