MGM 301 Lecture Notes - Lecture 11: Fixed Cost, Predatory Pricing, Variable Cost
14 Dec 2020
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Pricing- goal of capturing value of the product. Why is pricing important? administered pricing- there is no bartering, the seller determines the price and the buyer buys it or doesn"t buy it (cid:12254) (cid:12254) Two kinds of errors- too high (too much inventory), or too low (too little inventory) Participative pricing- option markets- a buyer buys a product, then resells it for more. Purpose of price- not to recover cost but to capture the value of the product in the consumer"s mind (cid:12254) Makes the consumer feel the product is worth more types of competition (cid:12254) (cid:12254) (cid:12254) Can increase value by lowering price, or increasing the bene ts (this is the way to go) Price communicates value, bene ts, etc. (get what you pay for) Pricing objectives sales objectives- dollar volume, unit volume. Market share- gives strategic power, lower price to increase sales and market share, then raise price afterwards.
