BU352 Chapter Notes - Chapter 11: Price Floor, Substitute Good, Demand Curve
Document Summary
Price is a signal: too low may signal poor quality, too high may signal low value. Company objectives: profit orientation: a company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing. Maximizing profits strategy: a mathematical model that captures all the factors required to explain and predict sales and profits, which should be able to identify the price at which its profits are maximized. Competitive parity: a firm"s strategy of setting prices that are similar to those of major competitors: customer orientation: pricing orientation that explicitly invokes the concept of customer value and setting prices to match consumer expectations. Price elasticity of demand = % change in quantity demanded/% change in price. Elastic: refers to a market for a product or service that is price sensitive, that is, relatively small changes in price will generate fairly large changes in the quantity demanded.
