Accounting MRK108 Chapter 19.1: Part 1 MRK108 Chapter 19

• School: Seneca College
• Department: Accounting
• Course: Accounting MRK108
• Professor: Ruggero

Document Summary

Setting the right price on a product is a 4-step process: establish pricing goals, estimate demand costs and profits, choose a price strategy to help determine a base price, fine-tune the base price by using pricing tactics. These goals are deri(cid:448)ed fro(cid:373) the fir(cid:373)"s o(cid:448)erall o(cid:271)je(cid:272)ti(cid:448)es. Good understanding of marketplace and of consumer can sometimes tell manager quickly whether goal is realistic. Profit maximization goal may require a bigger initial investment than the firm can commit or wants to commit. Sales-oriented goal means sacrificing short-term profit because without careful management, long-term profit goals may not be met. When managers set about establishing pricing goals, they must (cid:272)o(cid:374)sider the produ(cid:272)t"s de(cid:373)a(cid:374)d, (cid:272)osts, profits, Etc as it progresses through its life cycle. Progress usually means trade-offs occur in terms of meeting the target (cid:272)usto(cid:373)ers" (cid:374)eeds, (cid:271)ei(cid:374)g (cid:272)o(cid:373)petiti(cid:448)e, ha(cid:448)i(cid:374)g considerations for changing economic conditions. Total revenue is a function of price and quantity demanded and that quantity demanded depends on elasticity.