MKT 100 Lecture Notes - Lecture 11: Profit Margin, Price Skimming
18 Feb 2019
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Chapter 11: Pricing Concepts and Strategies:
Establishing Value
C: COMPANY OBJECTIVES
- Tiffany keeps its prices high
even during a recession to
protect its imge
PRICING STRATEGIES:
Profit Oriented- example all
products must provide for at
least an 18% profit margin to
reach set goal
Sales Oriented –set prices very
low to generate new sales
thus taking away sales from
competitors
Competitor Oriented- Set prices very low to discourage more competitors
from entering the market
Customer Oriented- target a segment of the market of consumers who
highly value a particular product benefit and set prices relatively
C: CUSTOMER
- The most important C!!!
- It’s all about understanding consumer’s reactions to different prices
- Consumers want value
- Price is half of the value equation
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Document Summary
Tiffany keeps its prices high even during a recession to protect its imge. Profit oriented- example all products must provide for at least an 18% profit margin to reach set goal. Sales oriented set prices very low to generate new sales thus taking away sales from competitors. Competitor oriented- set prices very low to discourage more competitors from entering the market. Customer oriented- target a segment of the market of consumers who highly value a particular product benefit and set prices relatively. It"s all about understanding consumer"s reactions to different prices. Price is half of the value equation. Price elasticity the market for a product or service is price sensitive (elastic) steak price insensitive (inelastic) milk. Monopolistic: many firms competing for customers, e. g. toys. Oligopolistic: cable tv firms such as rogers or. Pure: most frequently purchased consumer goods such as soft drinks. All costs calculated on a per unit basis. Assumes costs don"t vary for different levels of production.
