RMG 200 Lecture Notes - Markdown, Price Discrimination, Ebay
25 Apr 2013
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Competition because customers shop around and compare prices. Legal considerations: cost-oriented set price at a fixed percent over cost of merchandise e. g. , most fmcgs. Oriented charge as much a customers are willing to pay e. g. , airline ticket, hotel room charges coffee. Oriented set price in relation to competitor"s prices e. g. , banking fees, gasoline, Seeks to determine the price that customers are willing to pay and that will maximize profits. Price tests - setting different prices in a number of markets for the same product. Pricing experiments - changing the price in a systematic manner to observe changes in purchases or intentions. Set prices between regular non-sale price and deep discount sale prices of a high/low pricing competitor. Regular prices are higher than edlp competitors, but merchandise frequently on sale at lower prices. Price bundling the practice of offering two or more different products or services for sales at one price.
