o Complex math intuition rules of thumb o Need to consider product demand

O complex math intuition rules of thumb o need to

This preview shows page 11 - 14 out of 27 pages.

o Complex math, intuition, rules of thumb??? o Need to consider product, demand, competitive Pricing strategies Cost-based or cost-plus pricing o Add constant margin to cost o Margin must recoup overhead and handling costs and leave a profit o Ignores market conditions Competitive pricing o Prices based on competitor prices o May or may not be price matching, may strategically be above or below market or competitor price Contribution to overhead (CTO) or marginal cost pricing o Encourage extra sales by selling additional product above and beyond some base sales projection Price is slightly greater than additional out-of-pocket costs of handling the product o Ignores full cost of producing and selling a product, focus on incremental cost of making a sale o Assumes overhead costs covered by normal sales, additional products sold above variable costs contribute to overhead and profit o Negotiated contracts are normal sales, can give “spot” prices for extra sales Competitors may use “spot” price o Value-based pricing Set price level with or slightly below perceived value What is perceived value? Perceived value o Economic value analysis Reference value Price of competing product or close substitute Differentiation value Value of uniqueness of product Penetration pricing o Low pricing to take market share or brand acceptance o Sell in large volume to cover per-unit costs
Image of page 11

Subscribe to view the full document.

o New products or expect quick competition o May gradually increase prices Skimming the market pricing o High pricing to take market share or brand acceptance o Sell in smaller volume; higher profits on those units sold o New, unique, hard to copy, and fairly expensive o May gradually decrease prices Discount pricing o Reduced price from listed price o Volume discount o Cash discount o Early-order discount Loss-leader pricing o Reduced price for a limited amount of time o Draws in customers to other products Psychological pricing o Emotionally satisfying o End in 9, two for $1 vs. $1 each Prestige pricing o High price o High quality or elite image product o Intended for certain consumers o Value has to be greater than alternatives Legal aspects o Sherman Act, FTC act, and Clayton Act Can’t price to reduce competition o Robinson-Patman Act Can’t discriminate without cost justification Discounts available to all customers Unless, no interstate commerce and are final seller Place Place decisions o Marketing channels—systematic way of transferring physical product and ownership efficiently o Manufacturer direct channel Dealer channel Distributor channel Promotion Promotion strategy o Identify target audience Decision maker or key influencer
Image of page 12
o Communication objective Immediate purchase, information, etc.
Image of page 13

Subscribe to view the full document.

Image of page 14
  • Fall '08
  • Staff

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes