2596701387

2596701387 - ME2004 Project (Design and Make) Dr. David...

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1 ME2004 Project (Design and Make) Dr. David Yuen Lecturer, ME
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2 Product Pricing
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3 Overview of Lecture • "Anchoring" • Pricing – 3 different pricing models – 2 truthful elicitation procedures – 2nd price auction – price discrimination – price promotions – product bundling
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4 Estimate the product 1 × 2 × 3 × 4 × 5 × 6 × 7 × 8 = ????? 8 × 7 × 6 × 5 × 4 × 3 × 2 × 1 = ?????
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5 Anchoring on initial impressions alters interpretation of later information Intelligent – Industrious – Impulsive – Critical – Stubborn – Envious Envious – Stubborn – Critical – Impulsive – Industrious – Intelligent
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6 Anchoring in market research • Would you pay $25? YES NO How much would you pay? ________ • Would you pay $200? YES NO How much would you pay? ________
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7 More anchoring in marketing • How much would you expect to pay for all these products?….$100?…. .…… Well now, in this limited one time offer, you can get the entire set of Ginzu knives, Oxy 2000, and miracle brush for only $19.95!!!! But wait, there's more…. .
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8
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9
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10 Eliciting Consumer Values What is the most you would pay for "X"? • Two problems to overcome – Hypothetical bias – Strategic bias • Becker Degroot Marshak procedure • 2nd Price auctions
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11 Becker, DeGroot, Marshak truthful elicitation procedure
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12 2nd Price Auction 1. Everyone states their maximum Willingness to Pay 2. Person stating the highest bid wins the auction, but pays the amount of the 2nd highest bid. – Adam $10 –M a t t e w $ 8 – Teresa $12 – Monica $3
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13 Price can dramatically affect profits Annual demand = 1,000,000 units Production costs = $1.96 Current price = $2 Suppose you increased price by 1% By what percentage would profits increase? ______%
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14 The demand curve shows the relation between price and demand π = PQ π = P(30- 5P) π = 30P -5P 2 π / P = 30-10P 0 = 30-10P -30= -10P
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15 What are total profits at profit maximizing price?
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16 What are total profits at profit maximizing price? π = PQ π = P(42-3P) π = 42P -3P 2 π / P = 42-6P 0 = 42 -6P -42= -6P P*= $7 21 * $7 = $147
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17 The demand curve shows the relation between price and demand π = PQ π = P(30 π = 30P π / P = 30-10P 0 = 30-10P -30= -10P P*= $3
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18 Price Discrimination: gouging the rich and discounts for the poor
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19 Examples of price discrimination • senior citizen & college student discounts • matinee prices vs. evening movie prices • coupons & rebates
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Price promotions (sales) • What are some dis advantages? – Negative signalling about quality
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This note was uploaded on 04/06/2010 for the course ME ME2004 taught by Professor Dr.yuen during the Spring '10 term at NYU Poly.

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2596701387 - ME2004 Project (Design and Make) Dr. David...

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