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Chapter 11 Powerpoint

Chapter 11 Powerpoint - Chapter 11 Pricing Decisions...

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Chapter 11 Pricing Decisions
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211-2 Introduction to Pricing Issues Basic concepts Target costing Price escalation Environmental issues Gray market goods Dumping Price fixing Transfer pricing
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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
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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,  demand, competition—beer
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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 Penetration pricing
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611-6 Market Skimming and Financial Objectives Market skimming Charging a premium  price May occur at the  introduction stage of  product life cycle
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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
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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
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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
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1011-10 1. Does the price reflect the product’s quality? 2. Is the price competitive given local market conditions? 3. Should the firm pursue market penetration, market skimming, or  some other pricing objective?
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