BUSI 2210 Lecture Notes - Lecture 5: Geographical Pricing
Document Summary
Price: something given up in exchange to acquire a good or service. Reasonable price: perceived value at the time of transaction. Setting the right price is a difficult task due to: Increased availability of bargain-priced private and generic brands. Profit maximization: price so that total revenue is as large as possible relative to total cost. Market share: product sales as a percentage of total sales within the industry. Sales maximization: ignore profits, competition, and the marketing environment as long as sales are rising. Price-sensitive market then at or below market. Economies of scale lower costs so can pass savings on. Distribution channels are a cost factor as need to intensify. Prices across competitors stabilize and price reductions do little as competition just follows. Further price reductions as the few remaining competitors try to recoup as much as possible. Prices could even go up if the remaining product becomes a specialty good.