Marketing Ch14 part2

Marketing Ch14 part2 - o Target costing is deducting the...

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o Target costing is deducting the desired profit margin from the price at which the product will sell, given its appeal and competitor’s prices. Step 4: Analyzing Competitors’ Costs, Prices, and Offers Step 5: Selecting a Pricing Method o Three major considerations: (1) costs set a floor to the price, (2) competitors’ prices and the price of substitutes provide an orienting point, (3) customers’ assessment of unique features establishes the price ceiling. o The most elementary pricing method is to add a standard markup to the product’s cost. Markup pricing only works if the marker-up price actually brings in the expected level of sales. Sellers can determine costs much more easily than they can estimate demand. Prices tend to be similar and price competition is minimized. It is fairer to buyers and sellers. o In target-return pricing, the firm determines the price that would yield its target rate of return on investment (ROI). o
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Marketing Ch14 part2 - o Target costing is deducting the...

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