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Intro to Marketing_Herzenstein_Date_050510

Intro to Marketing_Herzenstein_Date_050510 - New product...

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More price Break Even Example: - Take a look at is. Answer is 400 units Customers: - Price elasticity demand: measure as the percentage in quantity demanded that occurs if respective to % price change So?? - Price elasticity demand o 4.6% change in demand (decreases) when price goes up by 1% Calculating Elasticity’s: - Look at examples and make sure you understand them - Shows a measure of price sensitivity! Reservation price: - Highest price you are willing to pay o If not willing to play the res price < actual price RP Example: - Don’t serve customer 6 because won’t cover your cost - $14.99 gets you the most profit Price discrimination: - Sale seller sells his/her same product at different prices to different customer o Usually price just below their reservation price 1 st : designer 2 nd : supermarket vs. COTSCO 3 rd : segments
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Unformatted text preview: New product pricing:-Price skimming: would lose surplus if didn’t do this (ex: technology {TV}) o Advantages: Can recover research and development cost before competitors enter the market Capture all consumer surplus o Disadvantages: Slows down product adoption May upset customer (ex: I Phone)-Price penetration: price low, aim for market share o Advantages: Fast adoption and word of mouth Sets barriers of entry for competitors (price and market share) o Disadvantages: Creates long term price expectations, may upset consumer who will pay higher price Bait & Hook:-Sell starter low but replacement is expensive Product line pricing:-Want to make money off of the line-Why? o Cost (appeal—economies of scale), competition—preemption...
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