MOS 2320 - Ch 11.doc

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2320A/B
Professor
All Professors
Semester
Spring

Description
Chapter 11What is a PriceThe amount of money charged for a product or serviceThe sum of all the values that the customers give up to gain the benefit Only element in the marketing mix that produces revenue all other elements represent costsCommon mistakes pricing that is too cost oriented rather than customervalued oriented and pricing that does not take the rest of marketing mix into accountFactors to Consider when Setting PricesCustomer Perceptions of ValueValuebased pricing uses buyers perceptions of value not the sellers cost as the key to pricingmarketer cannot design a product and marketing program and then set the priceCostbased pricing is product drivenIt sets a price that covers costs plus a target profitValuebased pricing sets the target price based on customer perception of value The targeted value and price then drive decisions about what costs can be incurred and the resulting product design Goodvalue pricing offering just the right combination of quality and good service at a fair priceEveryday low pricing involves charging a constant everyday low price with few or no temporary discountsHighlow pricing charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items Pricing power power to escape price competition and justify higher prices and profit marginsValueadded pricing attach valueadded features and services to differentiate their offers and thus support higher pricesCustomers are motivated not by price but by what they get for what they paidCompany and Product CostsCostbased pricing involves setting prices based on the costs for producing distributing and selling the product plus a fair rate of return for its effort and riskTypes of CostsTakes 2 forms fixed and variableFixed or overheadcosts that do not vary with production or sales levelVariable costs vary directly with the level of productionTotal costs sum of the fixed and variable costs for any given level or productionCosts as a Function of Production Experience
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