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Introduction to Pricing

Introduction to Pricing. Prepared by Gwen Cossin Video. Agenda. Goals of Pricing Concepts in Pricing Setting Price. Defined. Price is the value of money placed on a good or service. Goals of Pricing. Gaining Market Share Return on Investment Meeting the Competition. I Can….

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Introduction to Pricing

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  1. Introduction to Pricing Prepared by Gwen Cossin Video

  2. Agenda Goals of Pricing Concepts in Pricing Setting Price

  3. Defined Price is the value of money placed on a good or service

  4. Goals of Pricing • Gaining Market Share • Return on Investment • Meeting the Competition

  5. I Can… • Recognize different forms of pricing • Use Break-Even Analysis • Analyze Demand Elasticity • Understand Governments Role

  6. Beware of Bargains The telemarketer did his best to convince me to renew my subscription for another year. “At this price, it’s really a great bargain,” he said. “I’m elderly,” I laughed. “I might die before the subscription ends.” “No problem,” he assured me. “You’ll get a refund.” Reader’s Digest

  7. Factors involved in Price Planning • Costs and Expenses • Responding to Declining Profits • Response to Lower Cost/Expense • Break-Even shifts, e.g. the point at which sales revenue equals the costs and expenses of making and distributing the product

  8. Factors involved in Price Planning • Supply and Demand • Elastic Demand • when a shift in price results in a change in demand • Inelastic Demand • When a shift in price has very little effect on demand

  9. Factors involved in Price Planning • Consumer Perceptions • Quality • Availability • Service/Perks Pet Rocks? How stupid is that!!

  10. Factors involved in Price Planning • Competition • Price or non-price competition • Government regulates pricing practices Price Fixing • Price Discrimination • Resale Price Maintenance (limits manufacturer policies) • Minimum Price Laws (retailers may not sell below cost vs “loss leaders”) • Unit Pricing (packaging) • Price Advertising (bait-n-switch)

  11. Price Concepts Overview • Cost-Oriented • Markup • Cost-Plus • Demand-Oriented • Works when there are no substitutes • Competition-Oriented • No relationship between cost and price

  12. Product Life Cycle Demand Time

  13. Product Life Cycle Demand Improve, & Change Time

  14. Six Steps in Setting Price • Determine Objective • Study Costs • Estimate Demand (pilot) • Study Competition • Decide on Pricing Strategy • Set Price

  15. Price Calculation Refer to Chapter 27 Let’s try the Pricing Worksheet Key

  16. What is Marketing According to the American Marketing Association (AMA), marketing is defined as "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives."

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