Chapter 10 - Pricing Strategy

Chapter 10 - Pricing Strategy - CHAPTER 10 PRICING STRATEGY...

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CHAPTER 10 PRICING STRATEGY
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PRICING STRATEGY Price Theory and Practice Incremental Pricing Bases for Price Decisions Price Discounts Special Pricing Issues
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PRICE THEORY AND PRACTICE Price Theory (Economics) - Dominance of pricing Pricing in Practice (Business) - Influence of non-price factors
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P Q D D D D 1 1 Shifting the demand curve to the right
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USEFUL CONCEPTS FOR PRICING STRATEGY Price Elasticity Elastic demand Inelastic demand Cost Concepts Fixed cost Variable cost
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INCREMENTAL PRICING Using contribution to profit as the criteria for measuring profitability rather than net profit. Contribution to Profit = Total Revenue – Variable Cost Net Profit = Total Revenue – Total Cost
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CONDITIONS FAVORABLE FOR INCREMENTAL PRICING Heavy Fixed Cost Excess Production Capacity Price-Sensitive Niche Isolate from Core Market
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INCREMENTAL PRICING EXAMPLES Wall Street Journal Major hotels Matinee movies Happy hour
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WALL STREET JOURNAL (Yearly Rate) Business Rate $150 Student Rate $75 Library Rate $300
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This note was uploaded on 01/23/2012 for the course MARKETING 3336 taught by Professor Wyatt during the Spring '10 term at University of Houston.

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Chapter 10 - Pricing Strategy - CHAPTER 10 PRICING STRATEGY...

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