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BUILDING THE PRICE FOUNDATION

BUILDING THE PRICE FOUNDATION. NATURE AND IMPORTANCE OF PRICE. What is a Price? Barter. The price of four different purchases. Lamborghini What will this car cost?. NATURE AND IMPORTANCE OF PRICE. Price as an Indicator of Value Value-pricing Price in the Marketing Mix

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BUILDING THE PRICE FOUNDATION

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  1. BUILDING THE PRICE FOUNDATION

  2. NATURE AND IMPORTANCE OF PRICE • What is a Price? • Barter

  3. The price of four different purchases

  4. Lamborghini What will this car cost?

  5. NATURE AND IMPORTANCE OF PRICE • Price as an Indicator of Value • Value-pricing • Price in the Marketing Mix • Profit Equation

  6. Steps in setting price

  7. STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES • Identifying Pricing Constraints • Demand for the Product Class, Product, and Brand • Newness of the Product: Stage in the Product Life Cycle • Single Product versus a Product Line • Cost of Producing and Marketing the Product

  8. Collectable or Trashable?

  9. Collectable or Trashable?

  10. STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES • Identifying Pricing Constraints • Cost of Changing Prices and Time Period They Apply • Types of Competitive Markets • Pure monopoly • Oligopoly • Monopolistic competition • Pure competition

  11. Pricing, product, and advertising strategies available to firms in four types of competitive markets

  12. STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES • Identifying Pricing Constraints • Competitors’ Prices

  13. STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES • Identifying Pricing Objectives • Profit

  14. Where each dollar of your movie ticket goes

  15. STEP 1: IDENTIFY PRICING CONSTRAINTS AND OBJECTIVES Identifying Pricing Objectives • Sales • Market Share • Unit Volume • Survival • Social Responsibility

  16. STEP 2: ESTIMATE DEMAND AND SERVICE • Fundamentals of Estimating Demand • The Demand Curve

  17. Illustrative demand curves for Newsweek magazine

  18. STEP 2: ESTIMATE DEMAND AND SERVICE • The Demand Curve • Demand factors • Movement Along versus Shift of a Demand Curve

  19. STEP 2: ESTIMATE DEMAND AND SERVICE • Fundamentals of Estimating Revenue • Total revenue • Average revenue • Marginal revenue

  20. Fundamental revenue concepts

  21. How a downward-sloping demand curve affects total, average, and marginal revenue

  22. STEP 2: ESTIMATE DEMAND AND SERVICE • Fundamentals of Estimating Revenue • Price Elasticity of Demand • Price Elasticity for Brands and Product Classes

  23. STEP 3: DETERMINE COST, VOLUME, AND PROFIT RELATIONSHIPS • The Importance of Controlling Costs • Total cost • Fixed cost • Variable cost • Marginal cost

  24. Fundamental cost concepts

  25. STEP 3: DETERMINE COST, VOLUME, AND PROFIT RELATIONSHIPS • Marginal Analysis and Profit Maximization

  26. Profit maximization pricing

  27. STEP 3: DETERMINE COST, VOLUME, AND PROFIT RELATIONSHIPS • Break-Even Analysis • Break-even point • Break-even chart • Calculating a Break-Even Point

  28. Calculating a break-even point

  29. Break-even analysis chart

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