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McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
One of the Most Difficult Decisions in Marketing
$
Product
Place
Promotion Price
.
Price
Price must be a reflection of value
Product Price
Price must be a reflection of value
Product Price
Price must be a reflection of value
Product Price
Price must be a reflection of value
Product Price
Price must be a reflection of value
Product Price
Price must be a reflection of value
Product Price
.
.
.
Value
Value is the ratio of perceived benefits to price; orValue = (Perceived benefits divided by Price).
12-11
Value
Value is the ratio of perceived benefits to price; orValue = (Perceived benefits divided by Price).
12-12
Benefits = a dollar and some change worth of value
Value
Value is the ratio of perceived benefits to price; orValue = (Perceived benefits divided by Price).
12-13
Benefits = a dollar and some change worth of value= good value
..
Value
Value is the ratio of perceived benefits to price; orValue = (Perceived benefits divided by Price).
12-14
.
Product Price
.
Value
Value is the ratio of perceived benefits to price; orValue = (Perceived benefits divided by Price).
12-15
.
Product
Price
.
Value
Value is the ratio of perceived benefits to price; orValue = (Perceived benefits divided by Price).
12-16
.
Product
Price
.
Price must be a reflection of value
Product Price
Profit Equation
Profit = Total Revenue - Total Cost
.
Value = what I perceive to be the worth of the product when I compare it to substitutes.
.
Profit Equation
Profit = Total Revenue - Total Cost
.20 per glass.30 per glass
You will need to manuallyadvance to the next slide
.
Profit Equation
Profit = (Unit Price × Quantity Sold) – (Fixed Cost – Variable Cost)
You will need to manuallyadvance to the next slide
Profit Equation
Total Revenuex
Quantity SoldUnit Price
70 glasses = $35
Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
You will need to manuallyadvance to the next slide
.
Profit Equation
Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
.50 x 70 glasses = $35 Total Revenue
Fixed cost = $5 Variable cost = .20 per sale
.You will need to manuallyadvance to the next slide
.
Profit Equation
Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
.50 x 70 glasses = $35 Total Revenue
Fixed cost = $5 Variable cost = .20 per sale
You will need to manuallyadvance to the next slide
Profit Equation
Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
.50 x 70 glasses = $35 Total Revenue
Fixed cost = $5 Variable cost = $14
You will need to manuallyadvance to the next slide
Profit Equation Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
Profit = (.50 x 70) – 5 - 14
You will need to manuallyadvance to the next slide
Profit Equation Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
Profit = 35 – 5 - 14 = 16
You will need to manuallyadvance to the next slide
Profit Equation Profit = (Unit Price × Quantity Sold) – Fixed Cost – Variable Cost
Profit = 35 – 5 - 14 = 16
Profit = (P × Q) – [FC + (UVC × Q)]Price Quantity Fixed
CostUnit variable
costQuantity
(.50 X 70) [5 + (.20 X 70)] = 16-
You will need to manuallyadvance to the next slide
General Pricing Approaches
End of Part One.
Go to Part Two.
