Objectives.pptx

ObjectivesObjectivesSetting the PriceSetting the PriceAdapting the PriceAdapting the PriceInitiating&Responding to Price ChangesInitiating&Responding to Price ChangesTypes of CostsTotal CostsSum of the Fixed and Variable Costs for a Given Level of ProductionFixed Costs(Overhead)Costs that dontvary with sales or production levels.Executive SalariesRent Variable CostsCosts that do varydirectly with the level of production.Raw materialsPricing MethodsPricing MethodsMarkup PricingMarkup PricingTarget Return PricingTarget Return PricingPerceived Value PricingPerceived Value PricingValue PricingValue PricingGoing-Rate PricingGoing-Rate PricingSealed-Bid PricingSealed-Bid PricingSome important pricing definitionsSome important pricing definitionsUtility:The attribute that makes Utility:The attribute that makes it capable of want satisfactionit capable of want satisfactionValue:The worth in terms of Value:The worth in terms of other productsother productsPrice:The monetary medium of Price:The monetary medium of exchange.exchange.Value ExampleValue Example:Caterpillar CaterpillarTractor is Tractor is$100,000$100,000 vs.Market vs.Market$90,000$90,000$90,000 if equal$90,000 if equal 7,000 extra durable 7,000 extra durable 6,000 reliability 6,000 reliability 5,000 service 5,000 service 2,000 2,000 warranty warranty$110,000 in benefits-$110,000 in benefits-$10,000 discount!$10,000 discount!Psychological PricingMost Attractive?Most Attractive?Better Value?Better Value?Psychological reason to price Psychological reason to price this way?this way?A32 oz.$2.19B26 oz.$1.99Assume Equal QualityDiscriminatory PricingDiscriminatory PricingTimeProduct-formCustomer SegmentLocation