MGM230H5 Chapter Notes - Chapter 11: Marketing Mix, Product Lifecycle, Variable Cost

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10 Dec 2012
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Cons of reducing price: signals the importance of price over value, damaging price war, decrease profits or quality, cost-oriented rather than value-oriented: price. Definition: the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service. The only element in the marketing mix that produces revenue , most flexible: factors of pricing(p350, customer perception of value. Always start with consumers" value price ceiling. Hard to measure, vary for different customers and situation: company and product cost. Cost-based pricing: based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk-price floor. Types of cost: fixed costs (rent, heat, interest, salaries) and variable cost ( packaging, cost of the product) Short-run average cost : as plant size increases to a lrac, produce more, fixed cost is spread out.

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