24210 Lecture Notes - Lecture 7: Aldi, Retail, Variable Cost
Document Summary
Pricing can be based upon costs, demand or competition: understand the objectives that guide pricing strategies. Price (majority of consumers looks at price before features) Measure of value to buyers (benefit) & sellers (cover costs/profits) Major determinant of sales volume (influences cost production) Profits: generated when total revenues exceed total costs. Return on investment: profit required to justify investment in a particular product or project (e. g have to pay back npd costs) Market share (price penetration especially for mature markets) Long-term prosperity (cid:523)don(cid:495)t go for st kill, look for lt gain - low prices) Positioning (e. g. prestige product aldi can(cid:495)t increase prices when economy is booming since they are perceived as (cid:494)low prices(cid:495) Not-for-profit pricing (feel-good value from donating - psychological) Seek a return on their activities and charge for their products. Aim to generate enough funds to sustain activities. Encourage a change in attitude in target market (appealing products) Bait & switch=cheap/up sell (no intentions to sell advertised product)