undergraduate PRICING

undergraduate PRICING - Pricing Strategies Pricing A cynic...

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Pricing Strategies Pricing Strategies A cynic is someone who knows the price of everything and the value of nothing .
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What is Price? ...the sum of the values consumers exchange for the benefits of having or using a product or service. Most common pricing mistakes are: (1) being too cost-oriented and (2) not varying prices enough for different products and market segments.
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Pricing Process Setting the Objective Determining Demand Estimating Costs Analyzing Competitor Prices Selecting a Pricing Method Setting the Price
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Setting the Objectives Setting the Objectives High High Price Price Medium Medium Low Low High High Medium Medium Low Low Product Product Quality Quality Premium strategy Economy strategy Medium-value strategy Good-value strategy Super-value strategy Rip-off strategy High-value strategy False economy strategy Overcharging strategy
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Share/ Revenue/profit Low High Gross Pretax Profit Market share Curve 80 85 90 95 100 105 110 Revenue Normalized Price (dollar/unit) Relationship Between Price, Revenue, Relationship Between Price, Revenue, Market Share, and Gross Profit Market Share, and Gross Profit
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% Return on Investment Market Share 0 10 20 The Relationship Between %ROI and Market Share
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Setting Pricing Objectives Survival Maximum current profit Maximum sales growth Maximum Market Skimming Pricing decisions must always be made in conjunction with the strategic direction of the organization. Some pricing strategies include:
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Price Penetration and Skimming Price Quantity Skimming Pricing Sell at high price before reducing to next price level and repeat Initial Price Second Price Final Price Price Quantity Penetration Pricing Whole market price
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Pricing Objectives Sales Oriented Dollar or Unit Sales Growth Profit Oriented Status Quo Oriented Growth in Market Share Target Return Maximize Profits Meeting Competition Nonprice Competition Pricing Objectives
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Selecting a Pricing Method Markup Pricing Target-Return Pricing Perceived-Value Pricing Marginal Revenue Pricing Value Pricing Going Rate Pricing
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Marginal Revenue Pricing Price Quantity Quantity P 1 Q 1 Supply Demand
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This note was uploaded on 10/13/2010 for the course MKT B280 taught by Professor Lawrence during the Fall '08 term at Loyola New Orleans.

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undergraduate PRICING - Pricing Strategies Pricing A cynic...

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