MGMC13H3 Midterm: question & answer summaries for chapter 1 to 5
Document Summary
Chapter 1: define the 5 elements of pricing strategy and illustrate how they work in concert to maximize profitability. Value creation value creation includes creating economic value and offering design that convince people to pay matching prices to that value. Creating value allow companies to create offerings that are valuable to consumers which in turn may induce sales and increase profit for the company. Price sturcture price structure means setting price metrics, fences and controls. This is the next step after creating value for different consumer segments in pricing strategy. The most simple price structure is price per unit, which is adequate for commodity products and services. Setting more complicated price structures can reflect difference in the potential contribution obtained from different segments by capturing the best possible price from each segment, making the sale at the lowest possible cost. For example, an airline seat is valued at different levels for different customers.
