Mercadeo

Pricing Fundamentals
Price is a key element in the marketing mix because it relates directly to the generation of total revenue. Price is the value exchanged for products in a marketing exchange. Price is not always money paid; barter, the trading of products, is the oldest form of exchange. Usually price is viewed as a flexible marketing mix variable in that it can be adjusted quickly andeasily to respond to changes in the external environment.
A product offering can compete through price competition, where the marketer emphasizes price and matching or beating competitors' prices, or nonprice competition, where the marketers emphasizes factors other than price to distinguish a product from competing brands. Establishing brand loyalty by using nonprice competition works best when theproduct can be differentiated from competing brands and customers can recognize and care about these differences.
When analyzing prices, a marketer considers the demand curve and the price elasticity of demand. The demand curve is a graph of the quantity expected to be sold at various prices if other factors remain constant. Price elasticity of demand is a measure of the sensitivity of demand tochanges in price. If demand is elastic, a change in price causes an opposite change in total revenue. Inelastic demand results in parallel change in total revenue when a product's price is changed.
Analysis of demand, cost, and profit relationships--the fourth stage of the process can be accomplished through marginal analysis or breakeven analysis. Marginal analysis combines the demand curve witha firm's cost to develop an optimum price for maximum profit. To do marginal analysis, marketers must first calculate fixed costs (costs that do not vary with changes in the number of units produced or sold), average fixed cost (the fixed cost per unit produced), variable costs (costs that vary directly with changes in the number of units produced or sold), average variable cost (the variable costper unit produced), total cost (the sum of average fixed and average variable costs times the quantity produced), average total cost (the sum of the average fixed cost and the average variable cost), and revenue. Then marginal costs (MC), or the extra cost a firm incurs by producing one more unit of a product, and marginal revenue (MR), the change in total revenue resulting from the sale of anadditional unit of a product, are calculated. The optimum price is the point at which marginal cost (MC) equals marginal revenue (MR). Marginal analysis is only a model. It offers little help in pricing new products before costs and revenues are established.
Breakeven analysis is important in setting price. To use breakeven analysis effectively, a marketer should determine the breakeven point, thepoint at which the costs of producing a product equal the revenue made from selling the product, for each of several alternative prices. This determination makes it possible to compare the effects on total revenue, total costs, and the breakeven point for each price under consideration. However, this approach assumes that the quantity demanded is basically fixed and that the major task is to setprices to recover costs.
Many factors affect pricing decisions, including business and marketing objectives, pricing objectives, costs, other marketing mix variables, channel member expectations, customer interpretation and response, competition, and legal and regulatory issues. Because of the interrelationships among the marketing mix variables, price can affect product, promotion, anddistribution decisions.
Customers base their idea of a "fair" price on an internal reference price (a price developed in the buyer's mind through experience with the product) or an external reference price (a comparison price provided by others). These perceptions of a product and its price are relative to the value-conscious (those concerned about the price and quality of a product), price-conscious...