Marketing

Thomas Winston

Marketing homework #4

Chapter 19

1. What does the text denote as price? What is revenue as view by marketing managers?

According to the text price allocates resources in the free market economy. Price is that which is given up in an exchange to acquire a good or service. Revenue is what is charged to the customer multiplied by the number of units sold.

2. Discuss the following pricing objectives: profit-oriented pricing objective, sales-oriented pricing objective, and status quo pricing objective.

Profit-oriented pricing objective is when you have satisfactory profits and a target return on investments. Which would include profit maximization, meaning setting prices so that the total revenue is as large as possible relative to total cost according to the text?

Sales oriented pricing objective is based on market share or dollar or unit sales. With market share a company’s sales percentage is based on the total sales for that industry. Sales can either be reported in dollars or units of a product. Another Sales oriented pricing objective is sales maximization. A company with maximizing sales can ignore profits, competition, and marketing environment as long as sales are rising.

Status Quo pricing objective is when a company maintains its existing pricing or it meets the competitions pricing.

3. What is inelastic and elastic demand? Also, what factors affect the demand elasticity of a product or service?

Inelastic demand is when an increase or decrease in the price will not affect demand for the product. An elastic demand is when a customer may be sensitive to change in pricing. There are several factors that may affect the demand elasticity. Such as availability of substitutes, price relative to purchasing power, product durability, if the product has more than one use and rate of inflation.

4. Define the following terms:

a.keystoning: The practice of marking up prices by 100 percent, or doubling the...