AEM240.TakeNote.Prelim3 - AEM 240 Prelim 3 Take Note...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: AEM 240 Prelim 3 Take Note 19/11/2008 21:06:00 Week 8 October 22 Pricing Strategies and Objectives o Price = only marketing mix that brings in revenue, and it affects profit through both demand and supply o Price strategy Different kinds of profit Sales Market Share greater ROI Volume Survival Social Responsibility greenwashing Pricing Constraints o Demand for a product o Stage in the Product Life Cycle o Product Line o Cost of marketing and changing a price o Legal and ethical considerations o Competition Market structure based on degree of competition Pure monopoly sole seller Oligopoly some competition, price leader or follower of competition Monopolistic competition some, compete over range of prices Pure competition almost none, market sets price i.e. commodity sectors, like agriculture Demand and Revenue o Factors that shift demand curve: Consumer tastes and preferences Income Other products October 24 Demand o Inelastic demand vertical demand curve, less than 1 o Elastic demand horizontal curve, greater than 1 o Price Elasticity increases when Large number of substitutes Product is not necessity Inexpensive (relative to income) Adding Costs o Profit = total rev total costs; maximized @ MR=MC Break-Even Analysis o BEPquantity = Fixed Costs/Price Variable Costs o BEPprice = FC + VC(Q/Q) o Problems with BE analysis Assumes that demand and VC do not change with volume Assumes costs can be broken down into FC and VC i.e. costs to bring new drug to market; commodities prices all over the board Week 9 October 29 Selecting a Price Level o Demand approaches Prestige Pricing assumption is that as price is lowered past a certain point, quantity sold decreases because consumers see it as less available o Cost Oriented approaches Standard markup gross margins (way to measure price markup) in supermarkets is highest for perishable foods (bakery, produce, and deli) o Profit Oriented approaches Target Profit = TR TC P*Q = total revenue Target Return on Sales = Target Profit/TR Target return on investment = Target Return/Investment o Competition based approaches Loss Leader pricing prices are set so low that the margins established dont make or lose much money Establish a price thats at a substandard gross margin OR set the price so low that it doesnt even cover the cost you paid for it Bring customers to the store! Theyll buy other products o (VIDEO CLIP) perfume market worth $7.5B; top end of market (VIDEO CLIP) perfume market worth $7....
View Full Document

Page1 / 15

AEM240.TakeNote.Prelim3 - AEM 240 Prelim 3 Take Note...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online