Management and Organizational Studies 1021A/B Chapter Notes - Chapter 9: List Price, Target Costing, Loss Leader

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1021A/B
• Professor: Sarah Ross

Document Summary

The price paid for goods and services goes by many names: tuition, rent, interest, premium, fare, price. This practice is driven by consumers" zeal for low prices combined with the ease of making price comparisons on the. From a consumer"s standpoint, price is often used to indicate value when it is compared with the perceived benefits such as quality, durability, and so on of a product or service. Value is the ratio of perceived benefits to price. This relationship shows that for a given price, as perceived benefits increase, value increases. Value pricing increasing product or service benefits while maintaining or decreasing price. Marketers must be careful when using price as an indicator of value. A low price would imply poor quality, and ultimately poor perceived value. Although priced higher than conventional step-in bathtubs, it has proven very successful because buyers are willing to pay more for what they perceive as the benefit of extra safety.