Lecture Ch 14_BB - WhatYouShouldKnow...

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Jade S. DeKinder What You Should Know… The ratio that represents value The profit equation How to calculate elasticity of demand and the  different types of demand elasticity How to calculate break-even point
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Chapter 14: Arriving at the  Final Price Professor Jade DeKinder
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Jade S. DeKinder What You Will Know… The 3 final steps in setting price The four common approaches to setting  approximate prices The two common price policy options for  setting a list or quoted price
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Jade S. DeKinder 6 Steps in setting price
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Jade S. DeKinder Step 4: Select an Approximate  Price Level Demand- Oriented Pricing Cost-Oriented Pricing Profit-Oriented Pricing Competition- Oriented Pricing •Weighs factors underlying consumer tastes and preferences more than costs profit, and competition •Sums up costs of providing product/service and adds a specific markup •Balances revenues and costs to set price at point to obtain target •Heavy consideration of how competition (or “the market”) is pricing Four Common Approaches to Approximating Price
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Jade S. DeKinder Setting the Price of Products 4 Approaches to setting price level Demand- Oriented Pricing •Weighs factors underlying consumer tastes and preferences more than costs and profit
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Jade S. DeKinder Demand-Oriented Approaches Skimming Pricing A marketer sets a relatively high price for a product or  service at first, then lowers the price over time. It allows  the firm to recover its sunk costs before competition steps  in and lowers the market price. Penetration Pricing Prestige Pricing Price Lining September 26, 1996 -   Toshiba announces first  home DVD player SD- 3000 ($674). 
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Jade S. DeKinder Demand-Oriented Approaches Skimming Pricing Penetration Pricing A relatively low initial entry price, a price that is often  lower than the eventual market price. The expectation is  that the initial low price will secure market acceptance by  breaking down existing brand loyalties.  Prestige Pricing Price Lining Introductory price: $.75   Snickers Charged   boasts 60 milligrams  of caffeine, taurine  and other B vitamins  (about 10% of your  RDA). 
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Jade S. DeKinder
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Lecture Ch 14_BB - WhatYouShouldKnow...

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