BUAD301 Lecture Notes - Lecture 10: Gross Margin, Image Editing, Profit Margin
24 Oct 2018
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Price: the assignment of value, or the amount the consumer must exchange to receive the offering. Includes money, goods, services, favors, votes, etc. Set price objectives, estimate demand, determine costs, examine the pricing environment, choose the pricing strategy, develop pricing tactics. Must support the broader and overall marketing objectives. Profit: set prices to allow for an 8% profit margin on all goods sold. Sales/market share: develop bundle pricing offers to increase market share. Competitive effect: alter price strategy during first quarter to increase sales during competitor"s introduction of their new product. Customer satisfaction: alter price levels to match customer expectations. Image enhancement: alter price policies to reflect emphasis on quality image. Quantitative and qualitative factors to understand when setting prices. Demand: customer"s desire for a product (how much are they willing to pay) Law of demand: as prices go up, quantity demanded goes down. Price elasticity of demand: % change in sales when there"s a % change in price.
