Textbook Notes (369,082)
Canada (162,376)
MGTA02H3 (363)
Chapter 7

Chapter 7 Textbook Notes

10 Pages

Management (MGT)
Course Code
Chris Bovaird

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MGTA04 01 Chapter 7: Pricing and Distributing Goods and Services - %K057L.00O02039419K02,7N09L3J2L[ !8 K,8-0.420L390380O.42509L9L;0:7L3J9K0 last few years - Price is an important part of the marketing mix because it influences both consumers demand for a product and company profitability Price Objectives and Tools (pg. 151 155) - Pricing is deciding what the company will receive in exchange for its product Pricing to Meet Business Objectives - Companies price products in order to maximize profits as well as attaining other pricing objectives (goals that producers hope to attain in pricing products for sale. E.g. dominating the market, surviving in the marketplace, social and ethnical concerns etc...) Profit-Maximizing Objectives - Pricing to maximize profit is tricky o If price is too low: company may sell many units but will miss the opportunity of making additional profit on each unit or may lose money o If price is too high: company will make large profit on each item but may sell fewer units resulting in excess inventory and reducing production operations (again, the firm will be losing money) - Therefore, firms set prices to sell the number of units that will generate the highest profit - Companies may try out new pricing systems to try to increase profits o Coca-Cola: tested a vending machine that raised the price of products when the temperature rises and different prices on different vending machines depending on how many customers use the machine - In calculating profits, managers must weigh receipts with the costs for materialslabour to create the product. As well as the capital resources (equipment) and marketing (staffs) Pricing for Ebusiness Objectives - Marketers pricing for sales on the internet must consider different kinds of costs and different forms of consumer awareness - Many ebusiness are lowering both their costs and prices because they are able to directly communicate with the consumer rather than going through wholesalersretailers - Another factor is the convenience and ease of comparison shopping (more efficient) Market Share Objectives - Many new companies will initially set low prices for new products in order to establish market share ,.425,38507.039,J0419K0949,O2,7N098,O08147,850.L1L.574:.9 They are willing to accept minimal profits or even losses to get buyers to try their product - Even with establish products, market share may outweigh profits as a pricing objective (e.g. Philadelphia Brand Cream Cheese is well known and relatively cheap to buy) Other Pricing Objectives - In some instances, neither profit maximizing nor market share is the best objective. During L11L.:O99L208O488.439,L32039,38:7;L;,O2,-0.420,.425,382,L34-M0.9L;0 - E.g. in 2003, Universal cut the price of its CDs by one third due to complains about high CD prices and competition from illegal downloading services Price-Setting Tools - Before deciding on final prices, two basic tools are used for this purpose: cost-oriented pricing and break-even analysis www.notesolution.com
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