1. Marketing’s Role in the Global Economy
Chapter 12
Chapter One
Marketing’s Role in the Global Economy
Price Determination
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

2. Marketing’s Role in the Global Economy
Chapter Goals
Chapter One
Marketing’s Role in the Global Economy
Meaning of price
Significance of price
Concept of price and value relationship
Pricing objectives
Factors influencing price
Costs of producing and marketing a product
Approaches to determining price
Break-even analysis
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

3. other items with utility
Meaning of Price
Dues
PRICE
Amount of money and/or
other items with utility
needed to acquire
a product
Salary
Wage
Fare
Tuition
Interest
Rent
Commission

4. Importance of Price
Economy
Firm
Customer

5. Value
Benefits
Value =
__________________
Price + Incurred costs

6. Pricing Objectives: Profit-Oriented
Achieve a
Target
Return
Maximize
Profits

7. Pricing Objectives: Sales-Oriented
Increase
Sales
Volume
Maintain or
Increase
Market
Share

8. Pricing Objectives: Status Quo
Meet
Competition
Stabilize
Prices

9. Factors Influencing Price
Estimated Demand
Expected price
Demand curve
Price elasticity
Competitive Reactions

10. Price and Marketing Mix
Distribution
Channels
Promotion
Price
Product

11. Costs for an Individual Firm
Inverse Demand

12. Unit Cost Curves of a Firm
Unit Cost Curves of a Trim

13. Cost-Plus Pricing SELLING PRICE = Total Cost + Profit
Setting the price of one unit
of a product equal
to the total cost of the unit
plus the desired profit on the unit
SELLING PRICE =
Total Cost + Profit

14. King’s Kastles

15. Markup Pricing

16. Break-Even Analysis B E P : Total revenue = Total costs
BREAK-EVEN POINT
The quantity of output
at which total revenue equals total costs
assuming a certain selling price
B E P :
Total revenue = Total costs

17. Computation of Break-Even Point

18. Break-Even Chart

19. Demand Schedule for a Firm

20. Marginal Analysis

21. Pricing and Competition
Perfect Competition
Above Competition
Below Competition

22. Kinked Demand Curve

23. Marketing’s Role in the Global Economy
Key Terms and Concepts
Chapter One
Marketing’s Role in the Global Economy
Price
Barter
Value
Pricing objectives
Base price
Expected price
Inverse demand
Fixed cost
Total fixed cost
Average fixed cost
Variable cost
Total variable cost
Total cost
Average total cost
Marginal cost
Average fixed cost curve
Average variable cost curve
Average total cost curve
Marginal cost curve
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

24. Marketing’s Role in the Global Economy
Key Terms and Concepts
Chapter One
Marketing’s Role in the Global Economy
Cost-plus pricing
Break-even analysis
Break-even point
Marginal revenue
Average revenue
Pricing to meet competition
Perfect competition
Kinked demand
Dynamic pricing
Oligopoly
Pricing below competition
Pricing above competition
For use only with Perreault and McCarthy texts. © 2002 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin