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Transcript
CHAPTER 11
The Price Strategy
Factors Affecting Price
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Costs and Expenses
Supply and Demand
Consumer Perceptions
Competition
Government Regulations
Technological Trends
Pricing Objectives
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Return-on-Investment
Market Share
Social and Ethical Considerations
Meeting Competitor’s Prices
Establishing an Image
Price Strategy Options
• Basic
– cost-based
– demand-based
– competition-based
• Pricing Policies
– flexible-price
– one-price
Product Life Cycle
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Introduction
Growth
Maturity
Decline
Psychological Pricing
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prestige pricing
odd/even pricing
price lining
promotional pricing
Discount Pricing
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cash
quantity
trade
promotional
seasonal
Break-even Analysis
• fixed expenses divided by unit sales price
minus variable expenses
• see p. 189 for an example
Markup
• amount added to the cost of the item to
cover expenses and ensure a profit
• see p. 190 for examples
Markdown
• amount of money taken from the original
price
• see p. 191 for examples
Discount
• reduction in price to the customer (as a
percentage)
• see p. 192 for examples
Possible Price Changes
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Adjusting prices to maximize profit
Reacting to market prices
Revising terms of sale
Revising the price strategy