RSM100Y1 Chapter Notes - Chapter 17: Direct Market, Officemax, Price Fixing
Document Summary
Rsm 100y chapter 17: pricing and distribution of goods/services. Goals that the firm wishes to achieve through pricing (profits, image etc) If the price is too low, additional profits are missed. If too high, nothing is sold price discrimination! Set low prices for new products to get buyers to try products to establish a market share within an industry. During a recession, loss containment may be an objective, or general company survival based on new forms of competition (cds and napster) Targets a firms profit goal, and pricing accordingly to cover costs and earn a certain percentage as profit. Cost oriented pricing does not always work for all products (tickets) Through cost oriented pricing, a firm must cover its variable costs to earn a profit, and must cover fixed costs to prevent shutting down. Profit = total revenue (total fixed + total variable costs), profit = 0. Pricing above the market price sends the message of high quality.
