Pricing

Pricing - 14-1You can have brilliant ideas, but if you can...

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Unformatted text preview: 14-1You can have brilliant ideas, but if you can not get them across, your ideas will not get you anywhere- Lee IacoccaDeveloping Pricing Strategies and ProgramsTowns, Spring 201214-3Pricing Issues Include:How do consumers process and evaluate prices?How should a company set prices for products or services?How should a company adapt prices to meet varying circumstances and opportunities?When should a company initiate a price change?How should a company respond to a competitors price challenge? 14-4The Importance of PricePrice allocates resources in a free-market economyPrice allocates resources in a free-market economyTo the consumer...Price is the cost of somethingTo the consumer...Price is the cost of somethingTo the seller...Price is revenueTo the seller...Price is revenue14-5What Is Price?Price is that which is given up in an exchange to acquire a good or service money, time, energy, etc.PricePrice14-6Synonyms for PriceRentTuitionFeeFareRateTollPremiumHonorarium Special assessmentBribeDuesSalaryCommissionWageTax 14-7Trends Influencing PriceFlood of new productsFlood of new productsIncreased availability of bargain-priced private and generic brandsIncreased availability of bargain-priced private and generic brandsPrice cutting as a strategy to maintain or regain market sharePrice cutting as a strategy to maintain or regain market shareInternet used for comparison shoppingInternet used for comparison shopping14-8Price X Sales Unit = RevenueRevenue Costs = ProfitProfit drives growth, salary increases, and corporate investmentPricing Basics14-9Pricing ObjectivesProfit orientationSales orientationCompetitor orientationCustomer orientation14-10Four approaches for selecting an approximate price level14-11Return on InvestmentROI = Net Profit after taxesTotal assetsNet profit after taxes divided by total assets.Return on InvestmentReturn on Investment14-12Market ShareMarket ShareMarket ShareA companys product sales as a percentage of total sales for that industry.14-13Status Quo Pricing ObjectivesMaintainexistingpricesMaintainexistingpricesMeetcompetitionspricesMeetcompetitionspricesStatus Quo Pricing Objectives14-14The Cost Determinant of PriceVaries with changes in level of outputVaries with changes in level of outputTypes of CostsTypes of CostsVariableCostVariableCostFixed CostFixed CostDoes not change as level of output changesDoes not change as level of output changes14-15The Cost Determinant of PriceBreak-EvenPricingBreak-EvenPricingProfit Maximization PricingProfit Maximization PricingKeystoningKeystoningMarkup pricingMarkup pricingMethodsUsed toSet PricesMethodsUsed toSet Prices14-16...
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This note was uploaded on 04/02/2012 for the course BUAD 307 taught by Professor Morristowns during the Spring '07 term at USC.

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Pricing - 14-1You can have brilliant ideas, but if you can...

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