BUSI 2204 Lecture Notes - Lecture 10: Fixed Cost, Price Skimming, Integrated Marketing Communications
30 Sep 2020
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Price means one thing to consumer - cost of what they want. Price means another thing to seller - revenue and profit. Internal pricing and external pricing must be balanced to meet bottom line a customer needs. What is given up in exchange to acquire a good or service. May also include the time lost while waiting for the good or service. Reasonable price = perceived value at time of transaction. Revenue - price per unit x number units sold. Profit = what"s left over, most important element. Potential buyers carefully evaluate price of product against value of existing products. Increased availability of bargain priced private and generic brands. Based on market share or total sales maximization. Ignore profits, competition, marketing environment as long as sales are rising, very short term oriented. Maintain existing prices to meet competitor prices, requires little planning, passive policy. Step 2 - estimate demand, costs and profits.
