ASU MKT 300 EATON EXAM 4

Internal/External Factors of Price - Answer-Internal Factors of Price: 1. Marketing Objective 2. Marketing Mix Strategy 3. Cost External Factors of Price: 1. Demand for your product. 2. Competition 3. Economy Price Elasticity - Answer-Elastic - Consumers buy more or less of a product when the price changes Inelastic- An increase or decrease in price will not significantly affect demand What happens to price/revenue when the demand is elastic/inelastic - Answer-Demand is... Price goes... Revenue goes... Elastic: ------Up ---------- Down Elastic: ------Down ------- Up Inelastic: ----Up ---------- Up Inelastic: ----Down ------- Down Stages for Establishing Prices - Answer-1. Develop pricing objectives 2. Assess target market's evaluation of price 3. Evaluate competitors' prices 4. Select a basis for pricing 5. Select a pricing strategy 6. Determine a specific price Stages for Establishing Prices (Step 1 and 4) - Answer-Develop Pricing Objectives -Profit -Status Quo: Identify price levels similar to competitor average price -Market Share Selecting a Basis for Pricing -Cost: adding a specified dollar amount to the seller's costs (Markup and Margin) -Demand: Customers pay a higher price when demand for the product is strong and a lower price when demand is weak (same as flexible pricing) -Competition o competing products are homogeneous resulting in elastic demand o organization is serving markets in which price is a key consideration -New Product (Skimming and Penetration) Fl