MCS 3500 Chapter Notes - Chapter 7: Marginal Revenue, Giulio Carlo Argan, Price Discrimination
Document Summary
Thought for the day improving pricing systems may provide the best return on investment, compared to any other marketing activity. Find price to maximize profit (find price where marginal cost = marginal. Profit = quantity (price) [price unit cost] Price is independent of advertising, promotion, etc. Costs influence prices because they influence supply. Demand-oriented pricing (e. g. , elasticity analysis value-in-use analysis ch 2) Customers influence prices through their influence on demand. Competitors influence prices through their actions in the marketplace. The gabor-granger method asking willingness to pay using likert scale questions. Limitations only as good as the chosen conversion rates. Upside: holds true to a basic pricing rule: if no one is complaining. If optimal price falls outside of your tested range, you"re out of luck that you are priced too high, you"re priced too low (ie. optimal price exists at a level outside of maximum sales potential)