MKT 250 Lecture Notes - Lecture 10: Profit Margin, Fixed Cost, Variable Cost
Document Summary
Profit-oriented: focusing on reaching a particular profit goal (target profit pricing), maximum profit, the rate of return (target return pricing) Institute a company-wide policy that all products must provide for at least an 18% profit margin to reach a particular profit goal for the firm. Sales oriented: focusing on generating more sales number. Set prices very low to generate new sales and take sales away from competitors, even if the profits suffer. Customer-oriented: focusing on meeting customers" needs or value. To discourage more competitors from entering the market, set prices very low. Target a market segment of consumers who highly value a particular product benefit and set prices relatively high (referred to as a premium pricing) Besides sales, pricing should also incorporate costs and expenses for producing the goods to understand its profit. Profit= $ revenue from sales of the goods- $ total cost of producing the goods.
