MGM 13 - Today Key questions for today: Once a company has...

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Marketing III Tuesday, October 28, 2008 MGM 101 - Introduction to Management Functions Key questions for today: Once a company has decided on the “right” product/ service to satisfy their target customer, how do they decide on the “right” price? What options are available to a business when it comes to the distribution (“place”) for their goods? What are the most appropriate choices? How do companies effectively promote their products to the target customer, particularly as the “marketplace” becomes more crowded? How and why do marketers involved throughout the marketing process use testing as a key tool? Today Pricing judgments by companies are critical… Pricing goals: – Usually at a minimum, breaking even – Achieving a target profit level (measured by profits: sales, profit per employee or even absolute profitability), or maximizing return on investment – Building customer traffic • i.e. “loss leader” items in a grocery store – Buying market share – Creating a desired image in the marketplace » “Crazy Low Prices”… or a high-status reputation from premium priced products Pricing Strategies: Market entry Pricing for new products requires careful judgments about customer and competitor responses , and a company’s strategies for the future… What price, for this bike? “Skimming” Strategy “Penetration” Strategy High Price Low Price What is the long term plan for the product? How will we increase prices later? What are the risks involved in pricing? By pricing “too high”: Reduced sales – Higher profit per unit sold, but too much unsold stock which reduces overall profitability – Achieving a reputation for overcharging with customers – even if a more reasonable price is offered later, reputation may be damaged By pricing “too low” (relative to the market): » Demand might be too high, sell out of stock quickly »
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This note was uploaded on 04/25/2010 for the course MANAGEMENT MGM 100 taught by Professor Appleyard during the Fall '10 term at University of Toronto.

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MGM 13 - Today Key questions for today: Once a company has...

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