Chapter 11 Powerpoint

Chapter 11 Powerpoint - Chapter 11 Pricing Decisions 211-2...

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Unformatted text preview: Chapter 11 Pricing Decisions 211-2 Introduction to Pricing Issues Basic concepts Target costing Price escalation Environmental issues Gray market goods Dumping Price fixing Transfer pricing 311-3 How to Set Price The global manager must develop systems and policies that address Price floor: minimum price Price ceiling: maximum price Optimum prices: function of demand Must be consistent with global opportunities and constraints 411-4 Basic Pricing Concepts Law of One Price would prevail in a truly global market International trade helps keep prices low and low prices keep inflation in check Global markets exist for certain products— integrated circuits, crude oil National markets reflect costs, regulation, 511-5 Global Pricing Objectives and Strategies Managers must determine the objectives for the pricing objectives Unit sales Market share Return on investment They must then develop strategies to achieve those objectives 611-6 Market Skimming and Financial Objectives Market skimming Charging a premium price May occur at the introduction stage of product life cycle 711-7 Penetration Pricing and Non-financial Objectives Penetration pricing Charging a low price in order to penetrate market quickly Appropriate to saturate market prior to imitation by competitors 1979 Sony Walkman 811-8 Companion Products Products whose sale is dependent upon the sale of primary product Video games are dependent upon the sale of the game console “If you make money on the blades, you can give away the razors.” X-Box Game System and Sports Game 911-9 The Target-Costing Process Determine the segment(s) to be targeted Compute overall target costs Allocate target costs to product’s various functions Obey the cardinal rule 1011-10 1. Does the price reflect the product’s quality? 2. Is the price competitive given local market conditions?...
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This note was uploaded on 06/12/2011 for the course MKTG 475 taught by Professor Field during the Spring '11 term at Nicholls State.

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Chapter 11 Powerpoint - Chapter 11 Pricing Decisions 211-2...

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