This document provides an overview of pricing strategies and objectives for a marketing course. It discusses flexible versus inflexible pricing models and three primary pricing objectives: profit orientation, sales orientation, and status quo orientation. It also outlines several pricing tactics from demand-oriented and cost-oriented perspectives, such as premium pricing, penetration pricing, cost-plus pricing, and target return pricing. The reading assignments cover pricing objectives and policies as well as price setting in business.
Organic Name Reactions for the students and aspirants of Chemistry12th.pptx
BBA 3301, Financial Management 1 UNIT I STUDY GUIDE .docx
1. BBA 3301, Financial Management 1
UNIT I STUDY GUIDE
Foundations and Background of
Finance
Learning Objectives
Upon completion of this unit, students should be able to:
1. Discuss the nature of financial assets (securities) and
financial markets.
2. Explain the role of financial management in corporations and
its
relationship to accounting information and economic theory.
3. Contrast the forms of business organization.
4. Analyze the goal of maximizing shareholder wealth, agency
theory and
conflicts of interest.
5. Assess basic accounting information and data used in
financial decision
making.
6. Apply federal taxes in calculations.
2. Written Lecture
Welcome to BBA 3301! In this class you will study corporate
finance and be
exposed to many tools and techniques used in managerial
financial decisions.
As you work through the class, you will note that much of the
course applies to
“real world” situations. Whether it is planning your retirement,
purchasing
insurance or obtaining a loan, finance is everywhere. Enjoy the
class!
Finance involves many different areas including investments,
financial markets,
and corporate financial decision making. Corporate finance
includes the
management and control of money and money-related operations
within a
business.
In each of these areas, different types of assets are sold,
purchased or
exchanged. There are two primary classes of assets:
or physical assets that can be used in
production
of a good or service, or possibly have intrinsic value in trade.
Examples
include financial securities, insurance contracts, and derivative
instruments. Financial assets, such as bonds and stocks issued
3. by
corporations to raise money are bought by investors in financial
markets.
Financial markets are exchanges or organizations in which
people can
buy/sell securities.
Often corporations use financial markets to attract capital
(money) from
investors. There are three primary ways by which corporations
finance their
budgets and future growth:
ncing: retaining earnings
Reading
Assignment
Chapter 1:
Foundations
Chapter 2:
Financial Background: A
Review of Accounting,
Financial Statements, and
Taxes
4. Supplemental
Reading
See information below.
Learning Activities
(Non-Graded)
See information below.
Key Terms
1. Agency
2. Assets
3. Capital gains tax
4. Corporation
5. Financial asset
6. Financial markets
7. Financial statements
(balance sheet,
income statement &
statement of cash
flows)
8. Financing (sources of
capital)
9. Income tax
10. Liabilities
5. 11. Partnership
12. Proprietorship
13. Real asset
BBA 3301, Financial Management 2
14. Securities
15. Stakeholders
Investors buy securities for the future cash flows expected from
them. The link
between company management and investors is derived from
this relationship
between stock price and expected financial results.
Accounting and economics are important to finance. Often
accounting is referred
to as “the language” of finance. Most finance practitioners have
some knowledge
of accounting and are able to interpret financial statements
including the balance
sheet, income statement, and statement of cash flows.
Accounting data and
information is utilized with economics to make financial
decisions. Finance is an
offshoot of economic theory in the 1950’s that relies heavily on
economic theory
and tools. Accounting is usually focused on the recording of
historic information
while finance is focused on future cash flows.
6. Prior to delving into finance, you must first understand the
different forms of
business organization, including the proprietorship, the
partnership, and the
corporation. In studying each of these forms, there are
differences in their ability
to raise capital (money), types of taxation (exposure), and levels
of liability to the
owners/shareholders.
For analytical purposes the proprietorship and partnership are
very similar in the
following characteristics:
quirements are minimal).
owners to
acquire.
issues, losses
and lawsuits.
In contrast to the above, the corporate form offers benefits in
regard to liability,
but distinct disadvantages in complexity of actually creating the
corporation as
well as significantly higher taxation:
sources, capital (money) and
staff to
incorporate.
7. individual
level (shareholder) as individual income. There are exceptions
to this
double taxation involving an S-Corporation and LLC’s where
taxation is
similar to a partnership, and income is taxed once.
access
capital markets by issuing securities.
they have
some additional responsibility (management or director), they
have no
additional personal liability.
As you study finance, you should keep in mind the goal of the
firm:
—goal is to maximize profit. This definition
runs into
short/long run problems.
—goal is to maximize stockholders’ wealth by
maximizing
stock price. Under this definition, investors take a broad look at
corporate actions when bidding stock prices up or down.
In addition to understanding the importance of maximizing
shareholder wealth,
often corporate management must consider stakeholders
8. including:
stockholders, employees, suppliers, creditors, the local
community, and
management.
BBA 3301, Financial Management 3
In considering the goal of the firm, you will note the possibility
for an agency
conflict. This may occur when ownership of a widely held
corporation is
dispersed so no one has enough control to influence/remove
management.
When this occurs, it allows top management to become
entrenched in positions
controlling large amounts of resources and using them for their
own benefit.
Agency conflict can be controlled through active shareholder
involvement and
monitoring and tying management compensation to stock prices.
The second part of this unit is a review of content that is
usually covered in a
basic accounting course. Often, students find the need to brush
up on the
financial statements and taxes as they begin finance. Don’t
forget, accounting is
the “language of finance.”
9. There are three core financial statements (and their respective
components) that
are important to finance and financial decision making. They
are listed below
along with their key features:
1. Income statement
e
2. Balance sheet
bilities are arranged in order of decreasing
liquidity –
ease with which an asset becomes cash
cash,
accounts receivable and inventory; or they can be longer lived
10. assets known as fixed assets such as plant, property and
equipment. Note that depreciation is a non-cash expense that
lessens tax obligations while reducing book value of assets.
payable,
accruals, and forms of long-term debt (loans). The percent of
debt in
capital structure, also known as leverage, impacts returns to
shareholders because of the fixed nature of interest payments.
– Current Liabilities
tock, preferred stock, and
retained
earnings.
– Dividends + New Stock
Sold=
Ending Equity
3. Statement of cash flows
In finance it is important to understand the impact taxes have on
decisions and
the after tax returns to investments. There are three classes of
taxes: those on
wealth, income, and consumption (sales). Total effective tax
rate (TETR) is the
total or combined rate to which the taxpayer is subject and is
found with the
following equation
11. BBA 3301, Financial Management 4
TETR = Tf + Ts (1 – Tf)
where
Tf = federal tax rate
Ts = state tax rate
U.S. income taxes, whether corporate or individual, are
progressive in nature.
This means the percentage tax actually increases on a marginal
benefit. As
higher income is earned, a higher percentage of each
incremental dollar earned
is levied by the government. The current individual and
corporate tax rates are
identified in the charts below:
The above table can be found in your textbook on page 50.
Corporate Tax Rate
The above table can be found in your textbook on page 54.
12. There are two primary types of income taxes, those on ordinary
income and
those on capital gains (profits on selling assets). Historically,
capital gains tax
rates have been lower than taxes on ordinary income.
Now take a look at the supplemental reading materials and the
problems in the
assignment section. Along with the lecture, you have good
review tools and the
beginnings of your financial foundation. It won’t be long and
you may consider
yourself a financial whiz kid.
BBA 3301, Financial Management 5
Supplemental Reading
From the CSU Library:
Rapoport, M. (2012, February 21). U.S. nears accounting shift.
Wall Street
Journal (Online). Retrieved from Wall Street Journal database.
Anonymous. (2012, March 20). The U.S. Is number one; On
April 1, Japan
cedes the highest corporate tax rate to America. Wall Street
Journal
13. (Online). Retrieved from Wall Street Journal database.
Anonymous. (2012, January 23). Keeping accounting honest,
useful. Wall Street
Journal (Online). Retrieved from Wall Street Journal database.
Learning Activities (Non-Graded)
Calculate the tax liability for corporations with the following
EBTs:
a. $250,000
b. $500,000
c. $15,000,000
d. $50,000,000
Calculate the process in detail. You do not need to submit this
learning activity to
your professor.
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89594/Record/1362DC4324D189FD16E/6&t:cp=maintain/result
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GRADING RUBRIC
14. Good (14-11)
OK (10-6)
Poor (5-0)
Score
Organization
Clear and appropriate beginning, development and conclusion.
Paragraphs and transitions are clear and appropriate.
Adequate beginning, development and conclusion. Adequate
paragraph structure/flow and transitions.
Organizational structure and paragraphing have serious and
persistent errors.
Mechanics
No major errors in word selection, sentence structure, spelling,
capitalization and/or punctuation.
Multiple errors in word selection, sentence structure, spelling,
punctuation and/or capitalization.
Serious and persistent errors in word selection, sentence
structure, spelling, punctuation and/or capitalization.
Formatting
Perfect formatting of document.
Minor formatting errors in document.
Several formatting errors.
Sense of Audience
Strong concern for audience demonstrated through organization,
tone, and word choice.
Adequate sense of audience demonstrated through organization,
tone, and word choice.
Poor sense of audience demonstrated through organization,
tone, and word choice.
Critical Thinking
Document clearly identifies and clarifies the problem and
15. arrives at the best solution.
Document doesn’t clearly identify and clarify the problem and
arrive at the best solution.
Document doesn’t identify and clarify the problem nor arrive at
any solution.
Research
The topic under discussion seems thoroughly researched.
The topic under discussion seems adequately researched.
The topic under discussion seems poorly researched.
Total:
Peer Review (10
points) ________
Followed submission
guidelines (6 points) ________
Total Points (100)
_________
EMAIL ASSIGNMENT
What to do:
· See the example email on page 124.
· Read through that to see this very good example of a well
written email.
· Pretend that I am Aiden and that you are Liz and respond to
this email.
· Use my real name and your real name in place of theirs.
· For a little more info about the company, see 5.6 on p. 147.
However, do not follow the directions for the assignment in 5.6.
Just refer to the background info about the company.
· Prepare a rough draft of your email in a Word document and
bring to class on Thursday to be peer reviewed. Be there on
time with your hard copy as this peer review is worth 10 points.
· Do not send as an email yet. You will do so after you have
revised your rough draft.
16. Note: Do some reputable research to support your response.
And, make sure you follow all the guidelines for writing an
effective email discussed in the chapter and in my lecture.
POINTS: This assignment is worth 100 points.
BBA 3201, Principles of Marketing 1
Course Learning Outcomes for Unit VII
Upon completion of this unit, students should be able to:
1. Discuss the importance of determining value proposition to
the consumer.
1.1 Relate the importance of the value proposition to
competitive advantage
with respect to the promotional strategies of a company.
4. Explain how the marketing mix is used to reach the target
market.
4.1 Analyze whether a company maintains a competitive
advantage in
reaching its target market with respect to its promotional
strategies.
7. Examine pricing strategies utilized in an organization.
17. 7.1 Explain how a company uses components of pricing to
establish its
overall pricing strategy.
Unit Lesson
Price as defined by Perreault, Cannon, and McCarthy (2015), is
the amount of money
that is charged for something of value. Obviously, price is
controllable by the company
and has a significant impact on the overall profitability. The
reality of setting price
levels is that the optimal situation is setting prices high in order
to achieve the highest
profit for the company. While this is outwardly true, a marketer
needs to take a step
back and establish what the market will bear. In other words, it
needs to be
determined how high a price the target market is actually
willing to pay before they will
move to the competition. This ties in directly with how valuable
the product/service
really is to the target market. Pricing has many elements,
beginning with the flexibility
of the overall pricing structure. For instance, are the prices the
same for every
consumer that purchases the product, or does each consumer
have the opportunity to
bid or negotiate the price level? With respect to the large
retailer Macy’s, prices are
not flexible because pricing is established for every customer.
Contrary to this
example, a Ford dealership utilizes the flexible pricing model
18. where consumers
actually negotiate the final selling price of the automobile that
they are about to
purchase. Flexible versus not flexible pricing strategies tend to
be somewhat aligned
with industries, but not always.
Perreault et al. (2015) describe three pricing objectives: profit
orientation, sales
orientation, and status quo orientation. Beginning with the
profit orientation, this
suggests that the company is interested in obtaining a certain
profit level. What this
means is that the company will set the pricing level based upon
achieving this pre-
determined profit level. Companies that tend towards profit
orientation are ones that
might be looking to recoup high investment costs they have on
their books. The
second type of pricing objective is that of sales orientation.
This strategy looks at
increasing sales but not necessarily profits. This suggests that
marketers might not be
looking at the high costs of selling the product. The idea of this
pricing strategy is to
increase overall market share, which can create obvious long-
term competitive
advantages. The final pricing strategy is that of the status quo
objectives which are
Reading
Assignment
Chapter 16:
Pricing Objectives and
Policies
19. Chapter 17:
Price Setting in the
Business World
Suggested Reading
See information below.
UNIT VII STUDY GUIDE
Pricing Strategies
BBA 3201, Principles of Marketing 2
also dubbed the “don’t rock the boat” strategy. This suggests
that the company will
meet the competition but not attempt to under-cut or over-cut
the competition. The
idea behind this strategy is to avoid creating a pricing
battleground that could
ultimately have a negative impact on ALL players in the market.
Marketers also look at specific pricing tactics when establishing
their pricing policies.
The tactics listed below take on a demand orientation, meaning
that they weigh factors
like expected customer tastes and preferences more heavily than
20. other factors.
that of their
competitors and then dropping the price after a certain period of
time. A prime
example of this might be Apple who tends to introduce their
products at very
high price points only to drop their prices sometimes less than a
year later.
that of their
competitors to generate interest and then gradually raising
prices. This is
probably the technique that we see most often used.
setting the price high
and maintaining that price point. The quality of the
product/service is
perceived to be higher with the higher price point. This tactic
tends to be used
by high-end companies such as BMW or Nordstrom’s. If the
prices were
dropped, consumers might perceive that there is something
wrong with the
product.
Another approach is that of a more cost orientation, meaning
that the firm is basing
their pricing tactics on the overall costs of producing the
product or service.
21. -up pricing: This pricing tactic involves
establishing the price
point based upon a certain fixed percentage being added to the
cost of the
item.
a specific amount
to the cost of the item. While both of these tactics will cover the
company’s
costs in producing the product, it does not take into
consideration market
fluctuations or target market preferences.
The third approach is that of a profit orientation, which
suggests that the firm’s primary
interest is in reaching a certain profit level.
company is setting
an annual profit target and prices are set based upon this.
like the above
except that prices are based upon an established annual return
on sales.
similar to the above
except that prices are set based upon an established return on
investment.
22. These three strategies provide the benefit of ensuring that a
company is reaching
certain target levels, which is very favorable for publicly held
companies. On the other
hand, the obvious disadvantage is that this does not take into
consideration the
market and consumer fluctuations.
The final approach we will discuss is that of a competition
orientation, which suggests
that prices are set based upon what the competition is doing.
sets their prices
solely on the pricing level of the competition.
-the-market, at-the-market, or below-the-market
pricing: This pricing
tactic is practiced when a marketer makes a concerted effort to
establish one
of these levels with all the products within their company. This
provides a
certain brand identity with respect to pricing.
BBA 3201, Principles of Marketing 3
– This pricing tactic suggests that
marketers are setting
prices low on one product in order to attract consumers to other
higher priced
23. products. Understand that this is not deceptive because the
lower priced items
are still available for purchase.
Other pricing strategies could include the use of discount
policies or reductions from
list prices. This could involve quantity discounts, seasonal
closeouts, trade discounts,
or simply sale prices. At the end of the day, consumers love to
feel as if they have just
received a good deal, which this strategy reinforces. Perception
is half the game when
it comes to establishing an effective pricing strategy for a
company’s target market.
References
Perreault, W., Jr., Cannon, J., & McCarthy, J. (2015). Essentials
of marketing: A
marketing strategy planning approach (14th ed.). New York,
NY: McGraw-Hill.
Suggested Reading
Click here to access a PowerPoint presentation of the Chapter
16 material.
Click here to access a PDF version of this presentation.
Click here to access a PowerPoint presentation of the Chapter
17 material.
24. Click here to access a PDF version of this presentation.
https://online.columbiasouthern.edu/CSU_Content/Courses/Busi
ness/BBA/BBA3201/14P/UnitVII_Chapter16Presentation.ppsx
https://online.columbiasouthern.edu/CSU_Content/Courses/Busi
ness/BBA/BBA3201/14P/UnitVII_Chapter16Presentation.pdf
https://online.columbiasouthern.edu/CSU_Content/Courses/Busi
ness/BBA/BBA3201/14P/UnitVII_Chapter17Presentation.ppsx
https://online.columbiasouthern.edu/CSU_Content/Courses/Busi
ness/BBA/BBA3201/14P/UnitVII_Chapter17Presentation.pdf