pricing involves the customer demand schedule, the cost function, and competitors’ prices. The question is how should a company integrate cost-, demand-, and competition-based pricing considerations? In setting a price the firm, for example Kodak, will have to consider the following cost-, demand-, and competition-based pricing decisions:
pricing involves the customer demand schedule, the cost function, and competitors’ prices. The question is how should a company integrate cost-, demand-, and competition-based pricing considerations? In setting a price the firm, for example Kodak, will have to consider the following cost-, demand-, and competition-based pricing decisions:
Pricing In Marketing - UNIT-5 & 6-PRICING.pptetebarkhmichale
The law of attraction is the most powerful force in the universe. If you work against it, it can only bring you pain and misery. Successful people know this but have kept it hidden from the lower class for centuries because they did not want to share their wealth. The universal law of attraction is simple. We attract whatever we choose to give our attention to. If we focus on bad things, we will attract more bad things. But the minute you stop focusing on bad and focus on good, you change the pattern and now good things start coming your way.
If we knew the law of attraction and applied it in our lives daily, we would have so much power and control that it would be scary. We could have what we wanted, and when we wanted it. We would have total control of our lives. If you think of yourself as a powerful attractor, you will attract more of what you want in your life, simply by thinking about it, then acting on it. But there is one ingredient you cannot leave out or the law of attraction won't work.
When we think of an object in our mind, we then send that image to our hearts and act on it with emotion. A formula makes this easy to follow: TFAR (Thoughts, Feelings, Actions, and Results) When we take necessary action, the universe shows up and gives us the results we wanted.
The law of attraction works by performing three steps. And these steps must be done for the process to work. These steps are:
1. Getting clear. You must know what it is you want or else you won’t get it. The universe won’t know what you are asking for, so how can it deliver?
2. Vibrate to the level of energy corresponding to what you want. If you want something and you think about it, feel it, and act on it, you must keep that level of energy going until you achieve the results you are after.
3. Attract what you want like a magnet. If you focus on what you want but don’t allow it to come into your life, it won’t. You have to be willing to accept it and acknowledge it. Then when you act, it will occur.
Whatever you do during the course of a day, whatever thoughts you think about, you are attracting. If you use it every day, regularly, and practice it this way, you will eventually find that it becomes a habit that you will subconsciously practice.
You may not believe it, but the steps you need to take are easy. But you must do them, believe in them, and believe in yourself, or they will not work. Are you ready to get tuned into the universe and get clear? Can you work in harmony with the laws of the universe and become successful?
If so here are the steps you need to follow:
1. Get clear. You must know exactly what it is you want. If you are in doubt, vague, or too general, you won’t get anywhere. You must know exactly what it is you want first. Only then will you be able to focus and concentrate on that thought?
2. Visualize what you want and vibrate to it. You must form a mental image in your mind so you can see it as if you had it in your possession. For women, you can do the
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
Remote sensing and monitoring are changing the mining industry for the better. These are providing innovative solutions to long-standing challenges. Those related to exploration, extraction, and overall environmental management by mining technology companies Odisha. These technologies make use of satellite imaging, aerial photography and sensors to collect data that might be inaccessible or from hazardous locations. With the use of this technology, mining operations are becoming increasingly efficient. Let us gain more insight into the key aspects associated with remote sensing and monitoring when it comes to mining.
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
2. LO 1 Describe the procedure for setting the right price LO 2 Identify the legal and ethical constraints on pricing decisions LO 3 Explain how discounts, geographic pricing, and other special pricing tactics can be used to fine-tune the base price Learning Outcomes
3. LO 4 Discuss product line pricing LO 5 Describe the role of pricing during periods of inflation and recession Learning Outcomes
4. How to Set a Price on a Product Describe the procedure for setting the right price LO 1
5. How to Set a Price on a Product or Service LO 1 Fine tune with pricing tactics Choose a price strategy Estimate demand, costs, and profits Establish pricing goals Results lead to the right price
7. Choose a Price Strategy Price Strategy LO 1 A basic, long-term pricing framework, which establishes the initial price for a product and the intended direction for price movements over the product life cycle.
8. Choose a Price Strategy LO 1 Status Quo Pricing Price Skimming Penetration Pricing Charging a price identical to or very close to the competition’s price. A firm charges a high introductory price, often coupled with heavy promotion. A firm charges a relatively low price for a product initially as a way to reach the mass market.
9. Price Skimming LO 1 Situations When Price Skimming Is Successful Unique Advantages/Superior Legal Protection of Product Blocked Entry to Competitors Technological Breakthrough Inelastic Demand
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12. Setting the Right Price Estimate demand, costs, and profits Establish price goals Skimming Status quo Penetration LO 1 Choose a price strategy Fine-tune base price Set price $x.yy Evaluate results Low $ High $
13. The Legality and Ethics of Price Strategy Identify the legal and ethical constraints on pricing decisions LO 2
14. The Legality and Ethics of Price Strategy Unfair Trade Practices Price Fixing Price Discrimination Predatory Pricing LO 2
15. The Legality and Ethics of Price Strategy Unfair Trade Practices Laws that prohibit wholesalers and retailers from selling below cost. Price Fixing An agreement between two or more firms on the price they will charge for a product. LO 2
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17. Price Discrimination The Robinson-Patman Act of 1936: LO 2 Seller Defenses Cost Market Conditions Competition
18. Predatory Pricing Predatory Pricing LO 2 The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market.
19. Tactics for Fine-Tuning the Base Price Explain how discounts, geographic pricing, and other pricing tactics can be used to fine-tune the base price LO 3
20. Tactics for Fine-Tuning the Base Price LO 3 Special pricing tactics Discounts Geographic pricing
21. Discounts, Allowances, Rebates, and Value-Based Pricing LO 3 Quantity Discounts Cash Discounts Functional Discounts Seasonal Discounts Promotional Allowances Rebates Zero Percent Financing Value-Based Pricing
22. Value-Based Pricing Setting the price at a level that seems to the customer to be a good price compared to the prices of other options. LO 3 Value-Based Pricing
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27. Geographic Pricing LO 3 FOB Origin Pricing Uniform Delivered Pricing Zone Pricing Freight Absorption Pricing Basing-Point Pricing The buyer absorbs the freight costs from the shipping point (“free on board”). The seller pays the freight charges and bills the purchaser an identical, flat freight charge. The U.S. is divided into zones, and a flat freight rate is charged to customers in a given zone. The seller pays for all or part of the freight charges and does not pass them on to the buyer. The seller designates a location as a basing point and charges all buyers the freight costs from that point.
28. Other Pricing Tactics LO 3 Single-Price Tactic All goods offered at the same price Flexible Pricing Different customers pay different price Professional Services Pricing Used by professionals with experience, training or certification Price Lining Several line items at specific price points Leader Pricing Sell product at near or below cost Bait Pricing Lure customers through false or misleading price advertising Odd-Even Pricing Odd-number prices imply bargain Even-number prices imply quality Price Bundling Combining two or more products in a single package Two-Part Pricing Two separate charges to consume a single good
29. Consumer Penalties LO 3 An irrevocable loss of revenue is suffered Additional transaction costs are incurred Businesses Impose Consumer Penalties If...
30. Fine-Tuning the Base Price LO 3 Discounts Geographic Other Tactics Consumer Penalties Single price Flexible Professional services Price lining Leader Bait Odd–even Bundling Unbundling Two-part Uniform delivered Zone Freight absorption Basing- point Quantity • cumulative • noncumulative Cash Functional (trade) Seasonal Promotional (trade) Rebate 0% Financing Value-based Pricing Tactics FOB origin
34. Joint Costs LO 4 Joint Costs Costs that are shared in the manufacturing and marketing of several products in a product line.
35. Pricing during Difficult Economic Times Describe the role of pricing during periods of inflation and recession LO 5
36. Inflation LO 5 Cost-Oriented Tactics High Inflation Demand-Oriented Tactics
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39. Cost-Oriented Tactics LO 5 Increased Production Costs Decreased Demand Price Increase Maintaining a Fixed Gross Margin
40. Demand-Oriented Tactics Price Shading LO 5 The use of discounts by salespeople to increase demand for one or more products in a line.
41. Demand-Oriented Tactics LO 5 Strategies to Make Demand More Inelastic Cultivate selected demand Create unique offerings Change the package design Heighten buyer dependence
43. Supplier Strategies during Recession LO 5 Renegotiating contracts Offering help Keeping the pressure on Paring down suppliers
44. Pricing During Inflation and Recession Delayed- quotation pricing LO 5 Recession Inflation Contract product lines Escalator pricing Select demand Unique offering Change package design Increase buyer dependence Cost-oriented tactics Demand-oriented tactics Price Product Suppliers Value-based Bundling Unbundling New products New product categories Renegotiate contracts Offer help Keep pressure on suppliers Reduce number of suppliers
Editor's Notes
Chapter 20 Setting the Right Price Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: Setting the right price is a four-step process as shown in Exhibit 18.1.
Chapter 20 Setting the Right Price Notes: The first step in setting the right price is to establish pricing goals. In Chapter 17, we learned that pricing objectives fall into three categories—profit oriented, sales-oriented, and status quo. These pricing goals are derived from the firm’s overall objectives. For example, a company wanting to be the dominant sales leader will pursue a sales-oriented pricing goal. A conservative organization may establish a status quo goal. A company wanting to maximize shareholder value will establish aggressive profit-oriented goals. A good understanding of the marketplace and of the consumer can tell a manager if a goal is realistic. All pricing objectives have trade-offs. Reaching the desired market share often means sacrificing short-term profit, because without careful management, long-term profit goals may not be met. Meeting the competition is the easiest pricing goal to implement. But demands and costs, the lifecycle stage, and other considerations can not be ignored when creating pricing objectives.
Chapter 20 Setting the Right Price Notes: The price strategy sets a competitive price in a specific market segment. Consequently, changing a price strategy can require dramatic alterations in the marketing mix, including the product itself. Pricing a new product depends on the market conditions and the other elements of the marketing mix. For example, introducing a product resembling several others in the marketplace will have restricted pricing freedom. In contrast, introducing a product with no close substitutes will have considerable pricing freedom. Most companies do not do a good job of researching price strategies. In fact, recent studies showed that only 8 percent of the companies surveyed conducted serious pricing research to support the development of an effective pricing strategy.
Chapter 20 Setting the Right Price Notes: Companies that plan for creating a price strategy can select from three basic approaches: price skimming, penetration pricing, and status quo pricing. A discussion of each type follows.
Chapter 20 Setting the Right Price Notes: Price skimming is a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion. The term is derived from the phrase “skimming the cream off the top.” Companies often use price skimming for new products when the product is perceived as having unique advantages. As a product enters different stages of its life cycle, the price may decrease to reach larger market segments. Additional situations when price skimming is successful are listed on this slide. Firms often feel it is better to test the market at high prices and then lower the price if sales are too slow. A price skimming strategy will encourage competitors to enter the market. Discussion/Team Activity: List companies and/or products that utilize a price skimming strategy.
Chapter 20 Setting the Right Price On Line Southwest Airlines It’s no secret that Southwest Airlines has some of the cheapest fares around the nation. But just how much cheaper are they? The next time you travel, take the time to compare Southwest’s prices with another carrier’s. Has your regular airline met the challenge of Southwest’s penetration pricing strategy? If so, how? Notes: Penetration pricing is at the opposite end of the spectrum from price skimming. By charging a low price for a product, a larger share of the market is captured, resulting in lower production costs. It does, however, mean lower profit per unit, and a higher volume of sales is required to reach the break-even point. Penetration pricing does tend to discourage competition and is effective in a price-sensitive market.
Chapter 20 Setting the Right Price Notes: Status quo pricing means meeting the competition’s prices by charging an identical price or very close to the competition’s price. It is a simple method of pricing, but the strategy may ignore demand and/or cost. However, if the firm is small, meeting the competition’s prices may be the safest route to long-term survival.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: Some pricing decisions are subject to government regulation. Therefore, price strategy should be determined with a knowledge of laws that may limit decision making.
Chapter 20 Setting the Right Price Notes: The issues that limit pricing decisions are unfair trade practices, price fixing, price discrimination, and predatory pricing.
Chapter 20 Setting the Right Price Notes: In over half the states, unfair trade practice acts put a floor under wholesale and retail prices, and selling below cost is illegal. Wholesalers and retailers must take a certain minimum percentage markup on their combined merchandise cost and transportation cost. The most common markup figures are 6 percent at the retail level and 2 percent at the wholesale level. If a specific wholesaler or retailer can provide conclusive proof that operating costs are lower than the minimum required figure, lower prices may be allowed. The intent of unfair trade practice acts is to protect small firms from retail giants like Wal-Mart and Target, which operate efficiently on razor-thin margins. State enforcement of unfair trade practice laws has generally been lax, because low prices benefit local consumers. ------------------------------------------------------ Price fixing is illegal under the Sherman Act and the Federal Trade Commission Act. Cases involving price fixing include: * ISK Japan, for conspiring to fix prices for video magnetic iron oxide particles * Gemstar-TV Guide International *Hoechst AG, for suppressing competition for an industrial chemical used in production * Uniroyal, for fixing prices on neoprene *Hoffman-LaRoche for price fixing in the vitamin industry
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: The Robinson-Patman Act provides three defenses for the seller charged with price discrimination. In each case the burden is on the defendant to prove the defense . Cost: A firm can charge different prices to different customers if the prices represent manufacturing or quantity discount savings. Market conditions: Price variations are justified if designed to meet fluid product or market conditions. Examples include the deterioration of perishable goods, the obsolescence of seasonal products, a distress sale under court order, or a legitimate going-out-of-business sale. Competition: A reduction in price may be necessary to stay even with the competition.
Chapter 20 Setting the Right Price Notes: Predatory pricing is illegal under the Sherman Act and the Federal Trade Commission. However, proving the use of this practice is difficult and expensive. The Justice Department must show that the predator explicitly tried to ruin a competitor and that the predatory price was below the predator’s average variable cost.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: The base price is the general price level at which the company expects to sell a good or service. The general price level is correlated with the pricing policy: above the market, at the market, or below the market. The final step is to fine-tune the base price. Fine tuning techniques include discounts, geographic pricing, and special pricing tactics.
Chapter 20 Setting the Right Price Notes: A base price can be lowered through the use of discounts and the related tactics of allowances, rebates, low or zero percent financing, and value-based pricing. Discounts are used to encourage customers to do what they would not ordinarily do, such as pay cash, take delivery out of season, or perform certain functions with a distribution channel. The most common tactics are: Quantity discounts with lower prices for buying in multiple units of above a specified dollar amount. Cash discounts offered for prompt payment of a bill Functional discounts (trade discounts) are offered when channel intermediaries perform a service for the manufacturer. Seasonal discounts are lower prices for buying merchandise out of season. Promotional allowances (or trade allowance) are payments to dealers for promoting the manufacturer’s products. Rebates are cash refunds given for purchasing a product within a specified period. Zero percent financing offers no interest charge to increase sales. However, it does cost the manufacturers. Value-based pricing sets the price at a level that seems to the customer to be a good price compared to other prices.
Chapter 20 Setting the Right Price Notes: The basic assumption with value-based pricing is that the firm is customer driven, seeking to understand the attributes customers want in the goods and services they buy and the value of that bundle of attributes to customers.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: Pricing products too low reduces company profits. This happens for two reasons: The company is attempting to buy market share through aggressive pricing. Managers have a tendency to make decisions that can be justified objectively. As a result, pricing decisions are made based on current costs, projected short-term share gains, or current competitive prices rather than on long-term profitability.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: Other pricing tactics are unique and defy neat categorization. Managers use these tactics to stimulate demand for specific products, to increase store patronage, and to offer a wider variety of merchandise at a specific price point. These pricing tactics are described on this slide. Discussion/Team Activity: Discuss products and/or businesses that utilize these pricing tactics.
Chapter 20 Setting the Right Price On Line Princess Cruises Carnival Cruises How up-front are companies about their pricing penalties? Compare what you find out at Princess Cruises’ Web page (type “penalties” into the search box) with what you find on Carnival Cruises’ page. From a marketing standpoint, do you think it is better to hide penalties in the fine print or to clearly let the customer know in advance? Notes: More businesses are adopting consumer penalties—extra fees paid by consumers for violating the terms of a purchase agreement. Have your students brainstorm a list of common consumer penalties in different industries.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price On Line Beauty.com Does Beauty.com use a product line pricing strategy? Choose a brand and view the product list and pricing sheet. What evidence do you see of product line pricing? Of other pricing strategies? Notes: In product line pricing, the manager tries to achieve maximum profits for the entire line rather than for a single component of the line.
Chapter 20 Setting the Right Price Notes: In setting product line prices, the manager first determines the relationship among the products in the line: Complementary: An increase in the sale of one good causes an increase in demand for the complementary product. Substitutes: Two products in a line can be substitutes for each other. If buyers buy one item in the line, they are less likely to buy a second item in the line. Neutral: A neutral relationship can exist between two products. Demand for one of the products is unrelated to demand for the other.
Chapter 20 Setting the Right Price Notes: If costs are shared in the manufacturing and marketing of several products in the product line, product pricing is more difficult. Some common assignments of joint costs include a weight basis, market value, or quantity sold. Discussion/Team Activity: Name products that may require joint cost pricing.
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price
Chapter 20 Setting the Right Price Notes: One common cost-oriented tactic is culling products with a low profit margin. However this tactic may backfire for the three reasons listed on this slide.
Chapter 20 Setting the Right Price Notes: Cost-oriented tactics include delayed-quotation pricing, which is used for industrial installations and accessory items. Price is not set until the item is either finished or delivered. Examples: Builders of nuclear power plants, ships, airports, and office towers. Escalator pricing is similar to delayed-quotation pricing in that the final selling price reflects costs increases incurred between the time an order is placed and the time delivery is made. Examples: with new customers or with extremely complex products that take a long to produce. Another tactic is to hold prices constant but add new fees.
Chapter 20 Setting the Right Price Notes: Any cost-oriented pricing policy that tries to maintain a fixed gross margin under all conditions can lead to a vicious circle, as shown in the diagram on this slide. A price increase will result in decreased demand, which in turn increases production costs because of lost economies of scale. Increased production costs require a further price increase, etc.
Chapter 20 Setting the Right Price Notes: Demand-oriented tactics use price to reflect changing patterns of demand caused by inflation or high interest rates. Often price shading becomes habitual and is done routinely without much forethought.
Chapter 20 Setting the Right Price Notes: To make the demand for a good or service more inelastic and to create buyer dependency, a company can use the strategies as shown on this slide: Cultivate selected demand: Target prosperous customers who will pay extra for convenience or service. Example: Neiman Marcus Create unique offerings: By studying buyers’ needs, the seller can design distinctive products to fit a buyers’ needs and establish a beneficial relationship. Example: Value-added or multi-ingredient cereals Change the package design: Companies pass on higher costs by shrinking the product sizes but keep prices the same. Heighten buyer dependence: Provide additional value-added services and training with product offerings to freeze out competition and support higher prices. Example: Owens-Corning Fiberglas integrated insulation service (from feasibility studies to installation)
Chapter 20 Setting the Right Price Notes: Effective pricing tactics during recession are value-based pricing and bundling. Value-based pricing stresses to customers that they are getting a good value for their money. Bundling or unbundling of features or services gives a perception of higher value. Bundling can be demonstrated in vacation packages that include lodging, meals, massages, etc.
Chapter 20 Setting the Right Price Notes: In a recession, prices often fall so that companies can maintain demand for their products. Falling prices are an incentive to lower costs since falling prices mean lower profits or no profits. Suppliers can be excellent sources of cost savings. Some ways companies can use cost-saving strategies with suppliers are listed on this slide. Renegotiating contracts: Demanding lower prices or rebidding the contracts. Offering help: Help suppliers’ plants reorganize and increase productivity. Keeping the pressure on: Set annual, across-the-board cost-reduction targets. Paring down suppliers: Reduce the number of suppliers and boost purchases from those that remain.
