ADMS 3220 Lecture Notes - Lecture 8: Loss Leader, Pricing Strategies, Marketing Mix

• School: York University
• Department: Administrative Studies
• Course: ADMS 3220
• Professor: Pilar Carbonell

Document Summary

Pricing allows the company to obtain value back from customers. Pricing strategies are basically: low, medium, or high. In the middle, price is tweaked up or down relative to competitors" prices: company"s costs can dictate the lower-bound price, customers willingness to pay marks the upper-bound o, low. Nearly predatory: price so low to discourage competitors. Loss leader: sell below cost to bring in customers for other products. Competitive: what"s the going rate? : medium, high. Skim market: price high for margins, not worrying about volume. Prestige or status pricing: price high for image appeals. Profit = (price variable costs) x demand fixed costs. Cost-plus price = unit cost / (1 profit %) Break-even units = (fixed costs) / (unit price unit variable costs) Demand elasticity (aka price sensitivity): to find the extent of the impact of a price change on demand/profits. Inelastic: demand barely changes o: elastic: demand changes.