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Ch7 - BUSI 1004 Marketing Instructor QIU Cheng What is...

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Pricing 7 BUSI 1004 Marketing Instructor: QIU Cheng 2 What is “Price”? boxshadowdwn The amount of money charged for a product. The sum of values (money, goods, services, etc.) that consumers exchange for a product e.g., price for education 3 Overview What are the factors we should consider when setting prices? Some specific pricing strategies New-product pricing Product mix pricing Price-adjustment Price changes Initiating price changes Responding to price changes 4 Factors to Consider in Pricing
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5 Product Costs boxshadowdwn Total costs include square6 Fixed costs: costs that do not vary with production or sales level. e.g., rent, interest, executive salaries square6 Variable costs: costs that vary with the level of production. e.g., packaging, raw materials 6 Product Costs boxshadowdwn Average cost depends on square6 Level of production square6 Accumulated production experience – experience curve 7 Factors to Consider in Pricing What if costs > consumer willingness to pay? 8 Marketing Strategy When price is part of product positioning
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9 Nature of Market and Demand boxshadowdwn Types of markets square6 Pure competition is a market with many buyers and sellers trading uniform commodities and follow the market price . e.g., wheat, copper square6 Monopolistic competition is a market with many buyers and sellers who trade over a range of prices rather than a single market price with differentiated offers . 10 Nature of Market and Demand square6 Oligopolistic competition is a market with a few sellers who are highly sensitive to each other’s pricing and marketing strategies. e.g., airline, credit card company Usually non-price competition square6 Pure monopoly is a market with only one seller. Government regulation? Competition?
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