BU352 Lecture Notes - Lecture 11: Historical Cost, Geographical Pricing, Price Ceiling
Document Summary
Chapter 11: pricing concept an strategies: establishing value. Not an after thought to the rest of the marketing mix. The role of price in the marketing mix. Price is usually ranked as one of the most important factors in purchase decisions. Price is only element in marketing mix that generates revenue. All about understanding consumer reactions to different prices. Price is half of the value equation (other 50% is how much time consumers would spend to get the product) Knowing demand cures enables to see relationship between price and demand. Elasticity: how steep is your curve (more steep, higher elasticity) Inelastic (less elastic) (less than 1): small change in price = small change in quantity: products that are necessary in your life, even when price changes you still need it. Elastic (more elastic) (more than 1): small change in price = large change in quantity: luxury items easily substituted. Only between price and quantity, assuming everything else stays constant.
