AEM 240 Chapter 12 Notes


Info icon This preview shows pages 1–3. Sign up to view the full content.

NATURE AND IMPORTANCE OF PRICE What is a price? Price is the money exchanged for the ownership or use of a product Practice of exchanging goods for services w.o money is called bartering Price as an Indicator of Value Value pricing is the practice of increasing product benefits while maintaining or decreasing the price (giving more bang for the buck) o Ex. supersizing at fast food restaurants GENERAL PRICING APPROACHES Four ways to find a reasonable starting price point Demand-oriented o Emphasize factors underlying expected customer preferences Skimming Pricing: when introducing an new product set the highest initial price so that the consumers who really want the product will pay for it at this price, as the products are sold the price slowly decreases to cater to all people Penetration Pricing: Set a low initial price to appeal to the mass market Prestige Pricing: Setting a high price to increase perceived quality Odd-Even Pricing: Making prices .99 as opposed to 1 dollar Target Pricing: A pricing method that involves (1) identifying the price at which a product will be competitive in the marketplace, (2) defining the desired profit to be made on the product, and (3) computing the target cost for the product by subtracting the desired profit from the competitive market price. The formula is Target Price – Desired Profit= Target Cost
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Bundle Pricing: Marketing two or more products together for a single price
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.
  • Summer '07
  • Pricing, target profit pricing, Price fixing=

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern