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Chapter 12 Notes

Chapter 12 Notes - Schedule Thursday,November12,2009...

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Schedule Thursday, November 12, 2009  Mr. Roy Vallee, Chairman and CEO, Avnet,  Inc 5:30 p.m. - 7:00 p.m.  Professional Dress requested  Memorial Union, Pima Room #230   RSVP:  https://wpcarey.asu.edu/avnet   Wpcarey.asu.edu/scholarships 
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Schedule Today Exam 2 Recap Simulation Q4 Decisions due tonight Chapter 12 Wednesday No Class – Veterans Day Monday 11/16 Chapter 12 – Q5 Decisions due
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Ch. 12 - Pricing Concepts  Internal/External Factors of Price  Pricing Objectives  Elasticity  Cost-based Pricing
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Ch. 12 - Pricing Concepts New Product Pricing Methods of Pricing Product Mix Pricing Strategies Price Adjustment Strategies
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What is Price? $ - what you pay for  something or… The  value   that you  exchange for the benefits  of having or using the  product/service (i.e. time,  psychological costs, other  resources) Value = Benefits - Service  Benefits Brand  Benefits Product  Benefits Price & Other Costs Value
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Internal Factors of Price 1. Marketing Objectives to  maximize profits to gain  gain market share to infer a level of quality   to survive
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Internal Factors of Price 2. Marketing Mix Strategy price needs to be consistent with other  3P’s (needs to reflect advertising, etc.) 3. Costs your costs affect your profit, so set the  optimal price
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External Factors of Price 1. Demand for your product 2. Competition Competitor’s prices Strength of competition 3. Economy Cost of components (natural resources) Economic conditions
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maintaining price meeting competitions price profit -Oriented profit maximization satisfactory profits return on investment Pricing  Objectives sales -Oriented market share sales maximization
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Price Elasticity Tells us how much the demand for a  product will change with a change in  price % CHANGE IN Quantity  demanded of good “A”   % CHANGE In price of good “A”    E =
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Factors That Affect Elasticity Availability of substitutse Price relative to purchasing power Product durability A product’s other uses
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Elasticity of Demand elastic elastic Demand Demand Consumers buy more or less of a product when the price changes inelastic inelastic Demand Demand An increase or decrease in price will not significantly affect demand Unitary Unitary Elasticity Elasticity An increase in sales exactly offsets a decrease in prices, and revenue is unchanged
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Elasticity of Demand Price Goes... Revenue Goes...
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