pom reviewer q4

• Price


  The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service
• Price is the only element in the marketing mix that produces revenue; all other elements represent costs
• Price is one of the most flexible marketing mix elements
• Product cost estimation


  The total cost of production must be computed before determining the price of a product or service, as it would make no business sense if the price is less than the cost of production
• 2 types of cost being calculated

  • Unit variable cost
  • Fixed cost
• Fixed cost


  Costs that do not vary with production or sales level
• Direct materials


  Materials used in manufacturing a product
• Direct labor


  Wages of all workers directly responsible for production
• Direct overhead


  Amount spent in manufacturing the product or unit, such as energy, water, and other utility costs
• Break-even point


  The lowest possible price the company can set for its products (under normal circumstances)
• Customer value-based pricing


  Setting price based on buyer's perceptions of value rather than on the seller's cost
• 2 types of value-based pricing

  • Good-value pricing
  • Value-added pricing
• Good-value pricing


  Offering the right combination of quality and good service at fair price
• Value-added pricing


  Attaching value-added features and services to differentiate a company's offers and charging higher prices
• Cost-based pricing


  Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk
• 2 types of costs

  • Fixed costs (overhead)
  • Variable costs
• Total costs


  The sum of the fixed and variable costs for any given level of production
• Cost-plus pricing (mark-up pricing)


  Adding a standard mark-up to the cost of the product
• Break-even pricing


  Setting price to break even on the costs of making and marketing a product or setting price to make a target return
• Competition-based pricing


  Setting prices based on competitor's strategies, prices, costs, and market offerings
• Internal factors


  • Company's overall marketing strategy, objectives, and marketing mix
• External factors


  • The nature of the market and demand
• Odd pricing or psychological pricing


  A pricing strategy premised on the theory that consumers will perceive products with odd price endings as lower in price that they actually are
• Loss leader pricing


  A pricing strategy frequently utilized by supermarkets where they deliberately price 'loss leaders" or comparison items low to make their products appear more affordable than others
• Price lining


  A pricing strategy designed to simplify a consumer's buying decision by reducing the number of price points on merchandise to as little as possible
• Prestige pricing


  A pricing strategy that disregards the unit cost of a product or service and instead capitalizes on the high value perception or positive brand reputation, charging a price higher than its unit cost
• Marginal pricing


  A pricing strategy where a business organization prices its product at a range below its unit cost but higher than its unit variable cost
• Predatory pricing


  A pricing strategy where the firm prices its product lower than unit variable cost, initially resulting in short-term losses
• Going rate pricing


  A pricing strategy where a company prices its product at the same level as or very close to its competitors price
• Promotional pricing


  A pricing strategy involving a temporary reduction in the selling price of a product/service in order to induce a trial or to encourage repeat purchase
• Pricing objectives and strategy

  • Maximum revenue
  • Maximum market share
  • Maximum profit
  • Survival
• Promotion


  The part of marketing where you advertise and market your product, also known as a promotional strategy
• Elements of promotional mix

  • Advertising
  • Public relations
  • Personal selling
  • Direct marketing
  • Sales promotion
• Place


  The point of sale, with the main aim of catching the eye of the consumer and making it easy for them to buy
• Place mix (distribution mix)


  The main concern is to ensure the timely delivery of various products to the ultimate consumers at the right time and place through various distribution channels
• Distribution channel


  The path that a product takes before it is sold to the consumer
• Types of distribution channels

  • Direct selling (direct channel / zero-level channel)
  • Indirect channels
  • One-level channel
  • Two-level channel
  • Three-level channel
  • Dual distribution
  • Reverse channels
• Wholesalers


  Engaged in buying bulk products mostly from producers
• Retailers


  Selling goods directly to consumers for their personal, non-business use
• Distributors


  Selling bulk products to other businesses and vendors