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MKTG 305
Chapter 13 - Building the Price Foundation
| Term | Definition |
|---|---|
| Average Revenue (AR) | the average amount of money received for selling one unit of a product, or simply the price of that unit |
| Barter | the practice of exchanging products and services for other products and services rather than for money |
| Break-Even Analysis | a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output |
| Break-Even Chart | a graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold |
| Break-Even Point (BEP) | the quantity at which total revenue and total cost are equal |
| Demand Curve | a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price |
| Demand Factors | factors that determine consumers' willingness and ability to pay for products and services |
| Fixed Cost (FC) | the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold |
| Marginal Analysis | a continuing, concise trade-off of incremental costs against incremental revenues |
| Marginal Cost (MC) | the change in total cost that results from producing and marketing one additional unit of a product |
| Marginal Revenue (MR) | the change in total revenue that results from producing and marketing one additional unit of a product |
| Price (P) | the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service |
| Price Elasticity of Demand | the percentage change in quantity demanded relative to a percentage change in price |
| Pricing Constraints | factors that limit the range of prices a firm may set |
| Pricing Objectives | specifying the role of price in an organization's marketing and strategic plans |
| Profit Equation | Profit = Total Revenue - Total Cost; or Profit = (Unit price X Quantity sold) + (Fixed cost + Variable cost) |
| Total Cost (TC) | the total expense incurred by a firm in producing and marketing a product; total cost is the sum of fixed cost and variable cost |
| Total Revenue (TR) | the total money received from the sale of a product |
| Unit Variable Cost (UVC) | variable cost expressed on a per unit basis for a product |
| Value | the ratio of perceived benefits to price; or Value = (Perceived benefits / Price) |
| Value-Pricing | the practice of simultaneously increasing product and service benefits while maintaining or decreasing price |
| Variable Cost (VC) | the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold |
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