Download Price Setting and Ethical Marketing Learning Objectives Written

UNIT VIII STUDY GUIDE
Price Setting and Ethical Marketing
Learning Objectives
Reading
Assignment
Chapter 17:
Price Setting in the
Business World
Chapter 18:
Ethical Marketing in a
Consumer-Oriented
World: Appraisal and
Challenges
Supplemental
Reading
Exhibit 17
Exhibit 18
Upon completion of this unit, students should be able to:
1. Describe how most wholesalers and retailers set their prices by
using markups.
2. Explain why turnover is so important in pricing.
3. Define the concepts of costs including average cost pricing, total
cost, and average cost.
4. Explain how to use break- even analysis to evaluate possible
prices.
5. Discuss the advantages of marginal analysis and how to use it for
price setting.
6. Identify the various factors that influence customer price
sensitivity.
7. Describe why marketing must be evaluated differently at the micro
and macro levels.
8. Discuss the elements of the marketing strategy planning process.
9. Explain how to prepare a marketing plan and how it relates to
marketing strategy planning.
10. List challenges marketers face as they work to develop ethical
marketing strategies that serve consumers’ needs.
Learning Activities
(Non-Graded)
Written Lecture
See information below.
In Unit VII, we discussed advertising objectives and when various kinds of
advertising are needed and pricing and price flexibility.
Key Terms
1. Average cost (per
unit)
2. Average-cost pricing
3. Average fixed cost per
unit)
4. Average variable cost
(per unit)
5. Bait pricing
6. Bid pricing
7. Break-even analysis
8. Break-Even Point
(BEP)
9. Complementary
product pricing
10. Demand-backward
pricing
BBA 3201, Principles of Marketing
In this unit, we expand on various pricing concepts and strategies. Generally,
retailers and wholesalers use markups when setting prices. Some just use the
same markups for all their items because it is simpler, but this is not usually the
best approach. It is more effective to consider customer demand, competition,
and how markups relate to turnover and profit. It is important for marketing
managers to understand costs. If customers are not willing to pay a price that is
at least high enough to cover all of the costs of the marketing mix, the firm will
not be profitable. There are different types of cost that a marketing manager
needs to understand. One strategy used to set prices is average-cost pricing.
This approach can fail because it ignores demand. Marketers should use a
break-even analysis, which is a variation of the cost-oriented approach. It is
useful for analyzing possible prices. However, managers must estimate demand
to evaluate the chance of reaching these possible break-even points.
The major difficulty with demand-oriented pricing involves estimating the
demand curve. Experienced managers, perhaps aided by marketing research,
can estimate the nature of demand for their products. Even if estimates are not
exact, they can help get prices in the right ballpark. There is usually a profitable
range around the most profitable price. Marketers should consider demand when
setting prices. This is done with value in using pricing, psychological pricing,
1
11. Fixed-Cost (FC)
contribution per unit
12. Full-line pricing
13. Leader pricing
14. Marginal analysis
15. Markup (percent)
16. Markup chain
17. Markup
18. Negotiated price
19. Odd-even pricing
20. Prestige pricing
21. Price lining
22. Product-bundle pricing
23. Psychological pricing
24. Reference price
25. Stockturn rate
26. Total cost
27. Total fixed cost
28. Total variable cost
29. Value in use pricing
odd-even pricing, full- line pricing, and even bid pricing. Understanding the
factors that influence customer price sensitivity can make these approaches
more effective. Cost-oriented approaches should not be used by themselves, but
they do help the marketing manager understand the firm’s profitability. Pricing
decisions should consider the cost of offering the whole marketing mix. Smart
marketers do not accept cost as a given—target marketers always look for ways
to be more efficient — to reduce cost while improving the value that they offer
customers.
Macro-marketing is not very costly. Consumers have assigned business the role
of satisfying their needs. Customers find it satisfactory and even desirable to
permit businesses to cater to them and even to stimulate wants. As long as
consumers are satisfied, macro-marketing will not be costly and business firms
will be permitted to continue as profit making entities. Businesses exist at the
consumer’s discretion. It is mainly by satisfying the consumer that a particular
firm — and our economic system — can justify its existence and hope to keep
operating. In carrying out this role, business firms are not always as effective as
they could be. Many business managers do not understand the marketing
concept or the role that marketing plays in our way of life. They seem to feel that
business has a God given right to operate as it chooses. They proceed in their
typical production-oriented ways. Further, many managers have had little or no
training in business management and are not as competent as they should be.
Others fail to adjust to the changes taking place around them. A few dishonest or
unethical managers can do a great deal of damage before consumers/citizens
take steps to stop them.
As a result, marketing by individual firms often does cost too much. The situation
is improving. More business training is now available, and people that are more
competent are being attracted to marketing and business generally. The
marketing strategy planning process provides a framework that will guide
marketing managers to more effective marketing decisions and marketing that
really does deliver superior value to customers. It also benefits the firm, through
profits and growth. It is truly a “win-win” situation. In our competitive, marketdriven economy, managers and firms that lead the way in creating these
successes will not go unnoticed. As effective marketing management spreads to
more companies, the whole macro-marketing system will be more efficient and
effective. To keep our system working effectively, individual firms should
implement the marketing concept in a more efficient, ethical, and socially
responsible way. At the same time, consumers should consume goods and
services in an intelligent and socially responsible way.
Learning Activities (Non-Graded)
Article Review
For this assignment, choose a peer-reviewed article to review. Search for an
article related to one of the topics discussed in Unit VIII. Use the databases
within the CSU Online Library or use another source that contains peer-reviewed
articles. The purpose of this assignment is for you to practice reviewing articles
related to the field. The authors of these articles are researchers and
professionals in the field. Use these skills to contribute to research papers and
other scholarly writing. As you read the articles, consider the following questions:
How could the topic of this article apply to your personal or professional life?
How could it apply to an organization you have observed?
BBA 3201, Principles of Marketing
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The article you choose must meet the following requirements:
1. Peer reviewed
2. Related to the concepts within this course
3. At least five pages
The writing you submit must meet the following requirements:
1. At least two pages
2. Identify the main topic/question
3. Who is the author’s intended audience?
4. Summarize the article for page one
5. Think critically about the article and how it applies to this course for
page two
Format your article review using APA Style. Use your own words and include
citations for other articles as needed to avoid plagiarism. This is a non-graded
activity, so you do not have to submit it.
BBA 3201, Principles of Marketing
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