MKT 201 Chapter Notes - Chapter 14: Oligopoly, Fixed Cost, Monopolistic Competition
12 Dec 2016
School
Department
Course
Professor
Document Summary
Firms implement a profit orientation specifically by focusing on target profit pricing, maximizing profits, or target return pricing. Firms implement target profit pricing when they have a particular profit goal as their overriding concern; firms use price to stimulate a certain level of sales at a certain profit per unit. The maximizing profits strategy relies pri(cid:373)arily o(cid:374) e(cid:272)o(cid:374)o(cid:373)i(cid:272) theory si(cid:374)(cid:272)e it"s diffi(cid:272)ult to get a(cid:374) accurate mathematical model. Firms implement target return pricing when they are less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments: sales orientation: Firms that use a sales orientation to set prices believe that increasing sales will help the firm more than increasing profits. Some firms focus on competitive parity, which means that they set prices that are similar to those of their major competitors.
