Lecture Basic Marketing: A global-managerial approach: Chapter 18 - William D. Perreault, E. Jerome McCarthy

After completing this unit, you should be able to: Understand how most wholesalers and retailers set their prices using markups, understand why turnover is so important in pricing, understand the advantages and disadvantages of average-cost pricing, know how to use break-even analysis to evaluate possible prices, know the many ways that price setters use demand estimates in their pricing.

eference 18­11 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Full-Line Pricing ????? ????? ????? ????? ????? 18­12 MarketMarket- or or Firm Firm Oriented? Oriented? Complementary Complementary Pricing? Pricing? Product-Bundling Product-Bundling Pricing? Pricing? For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Bid and Negotiated Pricing Bid pricing means offering a  specific price for each  possible job.  Determining  costs is a complicated  process Negotiated pricing involves  setting a price as the result  of a bargaining process  between the buyer and  seller 18­13 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Terms Markup Markup (percent) Markup Chain Stockturn Rate Average-Cost Pricing Total Fixed Cost Total Variable Cost Total Cost Average Cost Average Fixed Cost Average Variable Cost Experience Curve Pricing Target Return Pricing Long-Run Target Return Pricing 18­14 Break-Even Analysis Break-Even Point (BEP) Fixed-Cost (FC) Contribution per Unit Marginal Analysis Marginal Revenue Marginal Cost Rule for Maximizing Profit Marginal Profit Price Leader Value in Use Pricing Reference Price Leader Pricing Bait Pricing Psychological Pricing Odd-Even Pricing Price Lining Demand-Backward Pricing Prestige Pricing Full-Line Pricing Complementary Product Pricing Product-Bundle Pricing Bid Pricing Negotiated Price For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill ... McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Terms Markup Markup (percent) Markup Chain Stockturn Rate Average-Cost Pricing Total Fixed Cost Total Variable Cost Total Cost Average... Average Cost Average Fixed Cost Average Variable Cost Experience Curve Pricing Target Return Pricing Long-Run Target Return Pricing 18 14 Break-Even Analysis Break-Even Point (BEP) Fixed-Cost (FC)... Unit Marginal Analysis Marginal Revenue Marginal Cost Rule for Maximizing Profit Marginal Profit Price Leader Value in Use Pricing Reference Price Leader Pricing Bait Pricing Psychological Pricing