Relationship between changes in product’s price and the demand for the product.

price decrease increases revenue; several goods substitutions available

price decrease will decrease revenue

Increase often makes it less attractive to consumers and reduces levels of sales.

Can be caused when a business is large enough to control a market or when a few businesses cooperate to take advantage of small businesses or consumers.

Also encourages the development of new products and services so consumers have additional choices.

Price Fixing , Price Discrimination, Price Advertising, Bait-and-Switch, Unit Pricing

Carefully study consumer demand and determine what the target market is willing to pay.

Prices set as high as possible while still satisfying customers.

Prices usually set low to encourage buying.

Must be set high enough to cover cost and have an adequate supply.

Usually done by companies that want a greater share of market or have high levels of inventory.

Many consumers believe that price and quality are related

The highest possible price that can be charged; determined by target market.

The lowest price; determined by the costs of the seller.

The quantity of a product that must be sold for total revenues to match total costs at a specific price.

A company can price its product anywhere between its total cost per unit and the amount customers are willing to pay.

All customers pay the same price

Allows customers to negotiate the price within a price range

Companies sell products in different parts of the country and throughout the world.

Cost of distribution and selling can be quite different at various locations.

Distinct categories of prices based on differences in product quality and features.

Makes it easier to analyze choices.

Reductions given to the customer in exchange for performing certain marketing activities

Customer’s perception of value can change by making additions to the purchase.

Services added during and after the sale.

credit extended by a retail business to the final consumer

credit offered from one business to another

Whether to offer it. Whether to offer on all products and all customers.

Offer own credit plan or rely on other companies.

Terms: amount, rate of interest, length of time

Customer are billed and payments made in an appropriate time

Determine characteristics and qualifications of the customer it will extend credit to