A sales orientation instead sets prices with the goal of increasing sales levels. With a
competitor-oriented pricing strategy, a firm sets its prices according to what its competitors do.
Finally, a customer-oriented strategy determines consumers’ perceptions of value and prices
LO2 Explain the relationship between price and quantity sold.
Generally, when prices go up, quantity sold goes down. Sometimes, however—particularly with
prestige products and services—demand actually increases with price.
LO3 Explain price elasticity.
Changes in price generally affect demand; price elasticity measures the extent of this effect. It is
based on the percentage change in quantity divided by the percentage change in price.
Depending on the resulting value, a market offering can be identified as elastic, such that the
market is very price sensitive, or inelastic, in which case the market cares little about the price.
LO4 Describe how to calculate a product’s break-even point.
Because the break-even point occurs when the units sold generate just enough profit to cover the
total costs of producing those units, it requires knowledge of the fixed cost, total cost, and total
revenue curves. When these curves intersect, the marketer has found the break-even point.
LO5 Indicate the four types of price competitive levels.
In a monopoly setting, either one firm controls the market and sets the price. In an oligopolistic
competitive market, a few firms dominate and tend to set prices according to a
competitor-oriented strategy. Monopolistic competition occurs when there are many firms
competing for customers in a given market but their products are differentiated. Finally, pure
competition means that consumers likely regard the products offered by different companies as
basic substitutes, so the firms must work hard to achieve the lowest price point, limited by the
laws of supply and demand.
Extended Chapter Outline With Teaching Tips
The Five Cs Of Pricing (PPT slide 14-4)
Company Objectives (PPT slide 14-5)
Profit Orientation (PPT slide 14-6)
Sales Orientation (PPT slide 14-7)
Competitor Orientation (PPT slide 14-8)
Customer Orientation (PPT slide 14-9)