Business Administration 3301K Lecture 17: Chapter11
17 Oct 2015
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Document Summary
Every other element in the marketing mix may be perfect, but with the wrong price, sales will not occur: historically, managers have treated price as an afterthought to their marketing strategy or by adding up their costs and tacking on a desired profit to set the sales price, consumers use the price of a product or service to judge its quality, particularly when they are less knowledgeable about the product category. If a firms can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized: target return pricing: a pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment.
