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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