Chapter 20 - Day 28 & 29 - Student

Chapter 20 - Day 28 & 29 - Student - CHAPTER 20...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: CHAPTER 20 Setting the Right Price BUENA VISTA IMAGES/THE IMAGE BANK/GETTY IMAGES LO 1 Describe the procedure for setting the right price LO 2 Identify the legal and ethical constraints on pricing decisions LO 3 Explain how discounts, geographic pricing, and other special pricing tactics can be used to fine-tune the base price Learning Outcomes LO 4 Discuss product line pricing LO 5 Describe the role of pricing during periods of inflation and recession Learning Outcomes Fine-tune with pricing tactics Choose a price strategy Estimate demand, costs, and profits Establish pricing goals Results lead to the right price How to Set a Price on a Product or Service Set Base Price Establish Pricing Goals P ro f it-O r ien ted S a les-O r ien ted S ta tu s Q uo Profit Maximization Satisfactory Profits Target Return on Investment Market Share Sales Maximization Maintain Existing Prices Meet Competition Prices Choose a Price Strategy A basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle. Price Strategy Choose a Price Strategy Status Quo Pricing Price Skimming Penetration Pricing Charging a price identical to or very close to the competitions price. A firm charges a high introductory price, often coupled with heavy promotion. A firm charges a relatively low price for a product initially as a way to reach the mass market. Price Strategy: Price Skimming Situations When Price Skimming Is Successful Unique Advantages/Superior Legal Protection of Product Blocked Entry to Competitors Technological Breakthrough Inelastic Demand Price Strategy: Penetration Pricing Advantages Disadvantages Can lead to lower cost per unit as production expands Discourages or blocks competition from market entry Boosts sales and provides large profit increases Requires gear up for mass production Selling large volumes at low prices Strategy to gain market share may fail Price Strategy: Status Quo Pricing Advantages Disadvantages v Simplicity v Safest route to long-term survival for small firms v Strategy may ignore demand and/or cost The Legality and Ethics of Price Strategy Unfair Trade Practices Price Fixing Price Discrimination Predatory Pricing Unfair Trade Practices and Price Fixing Unfair Trade Practices Acts Laws that prohibit wholesalers and retailers from selling below cost....
View Full Document

This note was uploaded on 02/12/2012 for the course SCM 301 taught by Professor Montabon during the Spring '11 term at Iowa State.

Page1 / 39

Chapter 20 - Day 28 & 29 - Student - CHAPTER 20...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online