Price_Policy_350_Notes_Apr_09

Price_Policy_350_Notes_Apr_09 - Competition rivals prices...

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Pricing Policies
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Profit-Focus Objectives Target Return = percentage of sales or capital investment; yardstick idea (GE) Satisfactory Profits = returns that insure a firm’s survival (Madison Symphony) Profit Maximization = charge all that traffic will bear
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Sales-Focus Objectives Sales Growth = seek some level of unit sales, without referring to profit (Amazon) Market Share = seek to gain a specific share (percent) of a market , benchmark idea (Coke)
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Status Quo Pricing Objective Status quo = hold a “don’t rock the boat” mindset Goal: non-price competition (Zappos.com)
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Stuart Cellars What factors demand, cost, π , competition Demand price/quality perception for wine Cost land, mfg, marketing, economies of scale, Profit trade, quality, cash discounts, promotional allowances
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Unformatted text preview: Competition rivals prices & offerings, wine reviews Stuart Cellars (cont) Assume that Stuart Cellars fixed costs are $1,000,000. With a retail price of $28 per bottle and a variable unit cost of $20.00, what is its BEP (in units)? If there are 12 bottle per case, how does the BEP compare to Stuart Cellars annual capacity of 16,000 cases? New-Product Pricing Strategies Skimming = feel out demand at a high price before aiming at more price sensitive consumers (McCaw) Penetration => capture the whole market with one low price (3Com) Pricing Policies Administered = firm sets price One-Price = offer the same price to all easy to use avoid rigid policy (Merck) Flexible-Price = offer different prices to different consumers (Ford)...
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Price_Policy_350_Notes_Apr_09 - Competition rivals prices...

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