Lecture 22_ Ch 14 - Chapter 14: Arriving at the Final Price...

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Chapter 14: Arriving at the Final Price Professor Jade DeKinder
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What You Should Know… { The ratio that represents value { The profit equation { The first three steps for setting prices { How to calculate elasticity of demand { How to calculate break-even point
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What You Will Know… { The 3 final steps in setting price { The four common approaches to setting approximate prices { How to calculate target return-on-sales
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6 Steps in setting price
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Step 4: Select an Approximate Price Level Demand- Oriented Pricing Cost-Oriented Pricing Profit-Oriented Pricing Competition- Oriented Pricing •Weighs factors underlying consumer tastes and preferences more than costs and profit •Sums up costs of providing product/service and adds a specific markup •Balances revenues and costs to set price at profit maximizing point •Heavy consideration of how competition is pricing Four Common Approaches to Approximating Price
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Setting the Price of Products 4 Approaches to setting price level Demand- Oriented Pricing •Weighs factors underlying consumer tastes and preferences more than costs and profit
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Setting the Price of Products 4 Approaches to setting price level Cost-Oriented Pricing •Sums up costs of providing product/service and add a specific markup
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4 Approaches to setting price level Profit-Oriented Pricing •Balances revenues and costs to set price at profit maximizing point Setting the Price of Products
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Setting the Price of Products 4 Approaches to setting price level Competition- Oriented Pricing •Heavy consideration of how competition is pricing Vs.
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Demand-Oriented Approaches ± Skimming Pricing a marketer sets a relatively high price for a product or service at first, then lowers the price over time. It allows the firm to recover its sunk quickly before competition steps in and lowers the market price. ± Penetration Pricing ± Prestige Pricing ± Price Lining
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± Skimming Pricing ± Penetration Pricing a relatively low initial entry price, a price that is often lower than the eventual market price. The expectation is that the initial low price will secure market acceptance by breaking down existing brand loyalties. ± Prestige Pricing
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This note was uploaded on 09/08/2008 for the course MKT 337 taught by Professor Mcallister during the Spring '07 term at University of Texas at Austin.

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Lecture 22_ Ch 14 - Chapter 14: Arriving at the Final Price...

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