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Chapter 7

Chapter 7- The 4 Ps-Price


Department
Management (MGT)
Course Code
MGTA02H3
Professor
Bill Mc Conkey
Chapter
7

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Chapter 7- The 4 Ps- Price
Price influences consumer demand for a product and company profitability
Consumers want products that satisfy their needs, and want them to be
available in the right place, and at the lowest prices
1- Identify the various pricing objectives that govern pricing decisions and
describe the price-setting tools used in making these decisions
PRICING OBEJECTIVES AND TOOLS
Pricing- deciding what the company will receive in exchange for its product
Pricing to Meet Business Objectives
Pricing objectives- goals that producers hope to get in pricing products for sale
Pricing decisions are influenced by the need to survive in the marketplace, by
social and ethical concerns and corporate image
Profit- Maximizing Objectives
If prices are too low, the company will sell many units of its products, but may
miss the opportunity to make additional profit on each unit and may lose
money on each exchange
If prices are too high, the company will make a large profit on each item, but
will sell fewer units and have excess inventory, which the firm will loses money
In calculating profits, managers weigh receipts against costs for materials and
labour to create the product
oConsider the capital resources (plant and equipment)
Pricing for Ebusiness Objectives
Must consider different kinds of costs and different forms of consumers
awareness than those pricing products to be sold usually
Many lower the costs and prices because of the internet’s unique marketing
capabilities
Buyers avoid the costs entailed by wholesalers and retailers
Internet shopping is more efficient than driving to the different stores to find
the best price
Market Share Objective
Market share- a company’s percentage of the total market sales for a specific product
May outweigh profits as a pricing objective
Other Pricing Objectives
Loss containment and survival may become a company’s main objectives
Price-Setting Tools
Company must measure the potential impact before deciding in final product
1
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