Transcript Pricing Products - Cengage Learning

Pricing Products
• Meaning and use of price
– The amount of money a seller is willing to accept
in exchange for a product at a given time and
under certain circumstances
– Price allocates goods and services among those
who are willing and able to buy them
– Price allocates financial resources (sales
revenue) among producers according to how well
they satisfy customers’ needs
– Price helps customers allocate their own financial
resources among various want-satisfying
products
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Pricing Products (cont’d)
• Supply and demand affects prices
– Supply
• The quantity of a product that producers are willing to sell at
each of various prices
• Quantity supplied by producers increases as the price
increases
– Demand
• The quantity of a product that buyers are willing to purchase
at each of various prices
• Quantity demanded increases as the price decreases
– Equilibrium
• Where the supply and demand curves intersect and quantity
and price for buyers and sellers are equal
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Supply and Demand Curves
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Pricing Products (cont’d)
• Price and nonprice competition
– Price competition
• An emphasis on setting a price equal to or lower than
competitors’ prices to gain sales or market share
– Nonprice competition
• Competition based on factors other than price
• Buyers’ perceptions of price
– Buyers will accept different ranges of prices for different
products
– A premium price may be appropriate if a product is
considered superior or has inspired strong brand loyalty
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