Transcript chapter 11 - rooseveltbusinessweeks

CHAPTER 11
The Price Strategy
Factors Affecting Price
•
•
•
•
•
•
Costs and Expenses
Supply and Demand
Consumer Perceptions
Competition
Government Regulations
Technological Trends
Pricing Objectives
•
•
•
•
•
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
•
•
•
•
Introduction
Growth
Maturity
Decline
Psychological Pricing
•
•
•
•
prestige pricing
odd/even pricing
price lining
promotional pricing
Discount Pricing
•
•
•
•
•
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
•
•
•
•
Adjusting prices to maximize profit
Reacting to market prices
Revising terms of sale
Revising the price strategy