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Lecture

MGTA02H3 Lecture Notes - Break Even, Fixed Cost, Marketing Mix


Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird

Page:
of 12
1
"Marketing " Chap. 7 Pricing & Distribution
Previously :
Marketing Overview: nothing
sells itself
Target markets: who
will buy product?
Marketing concept: focus on customer
needs
The 4 Ps: Product, price, promotion and place
Market Secondary vs. Primary
Research Quantitative vs. Qualitative
Observation vs. Communication
Product 3 types of consumer product
Product Life Cycle introduction, grwoth,maturity, decline
This Week: The 2nd
“P” - Price
How Does the Firm Determine its Selling Price?
Cost based pricing ("Bottom-Up")
Markup
Pricing Strategies: Market
Skimming
Penetration
Break-Even Analysis
2
Pricing
That part of the marketing mix concerned with choosing the
appropriate price for a product to meet the firm’s profit objectives and
buyers’ purchasing objectives
Note emphasis on “profit objectives
Price
The amount of money that a seller is willing to accept in exchange
for a product, at a given time under given circumstances.
Determinants of Price
Maximise Profits
Maximise Market Share
3
How Does Firm Determine Selling Price?
Cost based pricing ("Bottom-Up")
Start with your cost of goods sold.
Overhead costs = Operating costs = SG&A
Interest costs
What kind of profit do you want to make?
(Don't forget taxes).
What will you need to charge?
Will the market bear this price?
"Markup"
Markup = Markup = 5
Cost + Markup 10 + 5
Markup % = Markup = 5
Sales Price 15 = 33%