Pricing Concepts
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| Define price. | The value placed on that which is exchanged. | |
| Give examples of terms used to describe price. | rent, tuition, fee, fare, rate, interest, toll, premium, honorarium, bribe, dues, salary, commission, wage | |
| 2 Reasons Price is Important | 1)price determines profit 2)price is the only one of the 4Ps that can be changed quickly | |
| Profit = ? | TR - TC or P*Q - TC | |
| Describe the relationship between price and product. | If product is high quality, then price is high. If product is low quality, then price is low. | |
| Describe the relationship between price and distribution. | Expensive products = exclusive distribution. Cheap products = intensive distribution. | |
| Describe the relationship between price and promotion (specifically advertising). | Expensive product = do not mention price in ads. Cheap product = mention price in ads. | |
| 2 Issues in Pricing for Industrial Markets | 1)Price discounting 2)Geographic pricing | |
| 4 Types of Price Discounting | 1)trade discounts 2)quantity discounts 3)cash discounts 4)seasonal discounts | |
| 4 Geographic Pricing Tactics | 1)FOB factory 2)FOB destination 3)uniform geographic pricing 4)zone pricing |
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