MKTG 396 Chapter Notes - Chapter 11: Monopolistic Competition, Price Skimming, Geographical Pricing
Document Summary
Chapter 11 prices: value-seeking customers have put increased pricing pressure on many companies, reducing prices unnecessarily can lead to lost profits and damaging price wars. Edlp involves charging a constant, everyday low price with few or no temporary price discounts. Be(cid:272)ause there are fe(cid:449) sellers, ea(cid:272)h seller is alert a(cid:374)d respo(cid:374)si(cid:448)e to (cid:272)o(cid:373)petitors" pri(cid:272)i(cid:374)g strategies a(cid:374)d (cid:373)o(cid:448)es. If demand hardly changes with a small change in price, we say the demand is inelastic. However, such price cuts can have undesirable long-term consequences. Lo(cid:449)er pri(cid:272)es (cid:373)ea(cid:374) lo(cid:449)er (cid:373)argi(cid:374)s. deep dis(cid:272)ou(cid:374)ts (cid:373)ay (cid:272)heape(cid:374) a (cid:271)ra(cid:374)d i(cid:374) (cid:272)o(cid:374)su(cid:373)ers" eyes. No matter what price they charge low or high companies need to offer great value for the money: the company should set prices that give resellers a fair profit, encourage their support, and help them to sell the product effectively. The government is another important external influence on pricing decisions.
