BUS 202 Lecture Notes - Lecture 16: Profit Margin, Marginal Cost, Marginal Revenue

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 202
• Professor: dontremember

Document Summary

Chapter 16 notes: discuss the importance of pricing decisions to the economy and to the individual firm. Pricing plays an integral role in the canadian economy by allocating goods and services among consumers, governments, and businesses. Pricing is essential in business because it creates revenue, which is the basis of all business activity. In setting prices, marketing managers strive to find a level high enough to produce a satisfactory profit: list and explain a variety of pricing objectives. Esta(cid:271)lishi(cid:374)g (cid:396)ealisti(cid:272) a(cid:374)d (cid:373)easu(cid:396)a(cid:271)le p(cid:396)i(cid:272)i(cid:374)g o(cid:271)je(cid:272)tives is a (cid:272)(cid:396)iti(cid:272)al pa(cid:396)t of a(cid:374)(cid:455) fi(cid:396)(cid:373)"s (cid:373)a(cid:396)keti(cid:374)g strategy. Pricing objectives are commonly classified into three categories: profit oriented, sales oriented, and status quo. Profit-oriented pricing is based on profit maximization, a satisfactory level of profit, or a target return on investment. The goal of profit maximization is setting prices to produce profits that will satisfy management and its stockholders.