10-26 Lecture - AEM 2400 Lecture Prelim#2 Mean = 75.3 SD = 14 Agenda Pricing strategies Objectives/constraints Estimating demand/revenue What is

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10/26/09 AEM 2400 Lecture Prelim #2 – Mean = 75.3 SD = 14 Agenda: Pricing strategies Objectives/constraints Estimating demand/revenue What is price? Revenue generating Price is the only marketing mix variable that brings in revenue and it affects profit through both supply and demand As price gets lower, market share might grow, and companies might become more efficient Examples: tuition, rent, fare, interest, commission, dues, fee, etc Value = benefits/price You can increase value to customers by either increasing benefits, or lowering price Price vs. value Value = Taste, quality, nutrition, recipes, info, safety, freshness, fun/price for a shopper at a supermarket Pricing objectives (like firm objectives) Many companies will have one objective to achieve a certain profit level Profit – LR profit, current profit and target return (on investment) Often a trade-off between the different types of profit Long-run profit might sacrifice short-run profit Companies are under a lot of criticism because they try to meet short-run profit objectives but don’t think about long-run consequences Sales – easy to communicate, easy to see if you’ve hit the objective or not, often that larger sales lead to larger profit and market share
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This note was uploaded on 11/11/2009 for the course AEM 2400 at Cornell University (Engineering School).

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10-26 Lecture - AEM 2400 Lecture Prelim#2 Mean = 75.3 SD = 14 Agenda Pricing strategies Objectives/constraints Estimating demand/revenue What is

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