Chapter 11 Study Notes

Chapter 11 Study Notes - Chapter 11 Identify & define the...

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Chapter 11 Understand 2 general approaches to setting prices Internal Factors Affecting Pricing Decisions MARKETING OBJECTIVES Companies have to have a sense of what their product is and where they are  going. If you are a higher end product you need to charge a higher price. Sometimes  prices are set for more general purposes. Current Profit Maximization:  Choosing the price that will bring the most profit  based on supply and demand. Market Share Leadership:  Pricing to become the market share leader and likely  profit long term. Product Quality Leadership:  Usually requires charging a high price to cover high  Partial Cost Recovery:  A university may operate like this while hoping for grants  and donations to cover the rest. Full Cost Recovery:  A university may charge this for professional programs such  as MBA’s Social Price:  Charging different prices to different income levels such as not for  profit theater plays. MARKETING MIX STRATEGY Price is only a part of the Marketing Mix but many times it is the basis of your  strategy. If you want to be high end you will need to price high end to meet expectations  and costs. Sometimes companies will even reverse the usual pricing method by first  asking what we would like the price to be and then making sure our costs fit that price.  This is called  Target Marketing .
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COSTS Costs set the floor price of the product. Sometimes lowering these costs is the  principal aim of the company because it will bring a greater volume of sales. There are  many types of costs to consider. Fixed Costs:  
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This note was uploaded on 05/22/2008 for the course COMM 212 taught by Professor Brentpearce during the Spring '08 term at McGill.

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Chapter 11 Study Notes - Chapter 11 Identify & define the...

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