MGMA01H3 Lecture Notes - Lecture 7: Experience Curve Effects, Perfect Competition, Profit Maximization
Document Summary
November 8, 2016 lecture 7: pricing strategy. The only element of marketing that directly affects revenue not costs. Increasing prices doesn"t change fixed and variable costs, leading to a higher profit. Price as a component of positioning: costs. External factors of marketing: pure competition vs. monopoly. Is your product a monopolistic product or perfectly competitive. How sensitive to price changes is your product: competitive factors. Competitive prices as reference" prices: environmental factors. Principles for price setting: cost-based pricing. Lets you recover cost and make money on top of that. You need to know the fixed and variable costs. All the costs that a company is spending in order to expand the product: buyer-based pricing. To capture the perceived value of the product. Use buyer"s perceptions of benefits and buyer"s perceptions of costs. Shows the customers willingness to pay for a product: competition-based pricing. Pricing relative" to how the competitors have priced and less focus on costs and consumers" perceptions.
