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Chapter 11

Chapter 11.docx

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Concordia University
MARK 201

CHAPTER 11PRICINGOPENING EXAMPLEPrinter and razor companies give you the printer and razors cheap and thenmake MAJOR profit off blades papaer and inkCompanies need to sell value NOT price1 WHAT IS A PRICEamount of money charged for a product sum of values customers exchange for the benefits of having product or serviceMost important element of market share and profitabilityOnly thing that produces revenueUsually reduce price too quickly not customer oriented enough and does not take marketing mix into accountneed to learn to embrace pricing too cheap Made in China2 FACTORS TO CONSIDER WHEN SETTING PRICESIf company doesnt supply customer give value for price they wont buy the productoCustomer Perceptions of ValueValueBased Pricing based on buyers perceptions of value rather than on the sellers costDecided before marketing program is setNeed to analyze consumer needs and value perceptionsNeed to find a way to make customers understand the value of the productserviceMay need to do research1Goodvalue pricing right combo of quality and good service at a fair price Sometimes need to offer less value wont care cuz they want low pricesEveryday low pricingconstant with no discounts Dollarama2Valueadded pricing pricing power and ability to escape competition want value and are willing to pay for itoCompany and Product CostsBasing price on the costs for producing dsitribuing and selling the producy plys a fair rate of return for effort and riskSmaller margins but greater sales and profitsFixed costsoverhead do not vary with production or sales level rent and salariesVariable costsvary directly with the level of production varies with the number of units producedoCost at different level of productionThe more units you can produce the lower your costs will beoCosts as a function of Production ExperienceExperiencelearning curve drop in average per unit production cost that comes with production EXPERIENCE The more you know about the market the know how to make things cheaperNeed to get large market share early in products lifecycle 1Costplus pricing adding standard markup to cost of the product leaves room for markups dont need to make changes as demand changes price competition is minimized fairer to buyers and sellers
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