BUAD307_L10_Pricing

BUAD307_L10_Pricing - Pricing Strategies BUAD 307 Yi Zhu...

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Pricing Strategies BUAD 307 Yi Zhu 2011
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Marketing Process Identify Objective Analyze Environment Analyze Consumer S.T.P. Develop Strategy Product Price Place Promotion Competition SWOT
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Marketing Process Identify Objective Analyze Environment Analyze Consumer S.T.P. Develop Strategy Product Price Place Promotion Competition SWOT
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Objectives What is price? Pricing Objectives Considerations in Setting Price Pricing Strategies Legality and Ethics of Pricing
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What is Price? Tuition Rent Premium Fee Dues Fare Wage Interest Education An Apartment Life Insurance Dental Work Membership Bus Employee’s Work Borrowed Money Is the Price We Pay For
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Price is that which is given up in an exchange to acquire a good or service. Price What is Price?
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What is Price? Sacrifice Effect of Price What is sacrificed to get a good or service Money, Time, Dignity Information Effect of Price Infer quality information based on price Higher quality = higher price Convey status Value Based upon Perceived Satisfaction Reasonable Price = Perceived Reasonable Value Exchange based on expectation of satisfaction
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Price Objectives Profit Sales Status Quo
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Pricing Objectives Profit Profit maximization Satisfactory profit Target Return on Investment (ROI) Cost - Units Price Profit Assets Total Profit Net ROI
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Pricing Objectives Sales Market Share Unit volume sales Dollar sales Sales maximization Ignores cost (profit), competition, and the marketing environment Status Quo Meet competitors’ prices Sales Industy Total Sales Company S
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Demand The quantity of a product that will be sold in the market at various prices for a specified period. Supply The quantity of a product that will be offered to the market by a supplier at various prices for a specific period. The Demand Determinant of Price
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12 The Demand Curve
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The Supply Curve
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How Demand and Supply Establish Price Price Equilibrium The price at which demand and supply are equal. Elasticity of Demand Consumers’ responsiveness or sensitivity to changes in price.
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15 Price Equilibrium
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Elasticity of Demand Elastic Demand Consumers buy more or less of a product when the price changes. Inelastic Demand An increase or decrease in price will not significantly affect demand. Unitary Elasticity An increase in sales exactly offsets a decrease in prices, and revenue is unchanged.
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17 Elasticity of Demand
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How consumers response to price change? Elasticity of Demand price % sales % E Elasticity Food Category Category Brand Soft Drinks -3.18 -2.59 Canned Seafood -1.79 -.96 Canned Soup -1.62 -1.66 Cookies -1.60 -.90 Grahams/Saltines -1.01 -1.46 Snack Crackers -.86 -.79 Frozen Entrees -.77 -1.65 Refrigerated Juice -.74 -2.24 Dairy Cheese -.72 -1.44 Frozen Juice -.55 -1.95 Cereal -.20 -1.14 Bottled Juice -.09 -1.49
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Considerations in Setting Price Customer Perceptions of Value Price Ceiling No demand above this price
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This note was uploaded on 11/01/2011 for the course BUAD 307 taught by Professor Morristowns during the Summer '07 term at USC.

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BUAD307_L10_Pricing - Pricing Strategies BUAD 307 Yi Zhu...

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