ADMS 2200 Chapter Notes - Chapter 16: Pricing Strategies, Monopolistic Competition, Profit Maximization

• School: York University
• Department: Administrative Studies
• Course: ADMS 2200
• Professor: A L L

Document Summary

Pricing objectives of not-for-profit organizations: profit maximization, cost recovery, market incentives, market suppression (discouraging consumption) Methods for determining prices: customary prices: traditional prices that customers expect to pay for certain goods and services, marketers determine prices by theoretical supply and demand analysis and by completing cost-oriented analysis. Incremental-cost pricing: use only cost attributable to specific output. Global issues in price determination: prestige objectives are valid when products provide an intangible benefit, for example exclusiveness, price stability important for commodity producers. Learning objective 3: compare the alternative strategies and explain when each strategy is most appropriate. Skimming pricing strategy: pricing strategy involving the use of an initial high price relative to competitive offerings. Price is dropped in incremental steps as supply begins to exceed demand, or when competition catches up. (you sell product for high price) It is commonly used as a market entry price for distinctive goods or services with little or no initial competition.