...the Concepts: Chapter Objectives 1. Discuss the importance of understanding customer value perceptions and company costs when setting prices. 2. Identify and define the other important internal and external factors affecting a firm’s pricing decisions. 3. Describe the major strategies for pricing imitative and new products. 4. Explain how companies find a set of prices that maximize the profits from the total product mix. 5. Discuss how companies adjust their prices to take into account different types of customers and situations. 6. Discuss the key issues related to initiating and responding to price changes. Just the Basics Chapter Overview Pricing is the second element in the marketing mix. It plays a powerful role, and that role is detailed in this chapter. There are several sections to this chapter and a lot of material to address. The chapter begins with discussing what a price actually is. It makes the point that price is more than just the money the buyer hands over to the seller—the broader view is that the price is the sum of all the values that the buyer exchanges for obtaining or using the product. There is also a brief discussion of dynamic- versus fixed-price policies, and how we as a society have evolved from dynamic to fixed and back to dynamic again. The chapter then moves into the heart of pricing. Both internal and external factors that must be considered when setting price are detailed, as are the three general pricing...
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...AFTER READING THIS CHAPTER, YOU SHOULD BE ABLE TO: 1 Discuss price elasticity of demand and how it can be applied. 2 Explain the usefulness of the total revenue test for price elasticity of demand. 3 Describe price elasticity of supply and how it can be applied. 4 Apply cross elasticity of demand and income elasticity of demand. 4 Elasticity In this chapter we extend Chapter 3’s discussion of demand and supply by explaining elasticity, an extremely important concept that helps us answer such questions as: Why do buyers of some products (for example, ocean cruises) respond to price increases by substantially reducing their purchases while buyers of other products (say, gasoline) respond by only slightly cutting back their purchases? Why do higher market prices for some products (for example, chicken) cause producers to greatly increase their output while price rises for other products (say, gold) cause only limited increases in output? Why does the demand for some products (for example, books) rise a great deal when household income increases while the demand for other products (say, milk) rises just a little? Elasticity extends our understanding of markets by letting us know the degree to which changes in prices and incomes affect supply and demand. Sometimes the responses are substantial, other times minimal or even nonexistent. But by knowing what to expect, businesses and the government can do a better job in deciding what to produce, how much to charge, and, surprisingly...
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...2014-06 July 2014 * Financial Stability Department ** Economic Research Department Reserve Bank of Australia Thanks to Tom Cusbert, Luci Ellis, Richard Finlay, Alex Heath, Jonathan Kearns, Christopher Kent, David Lancaster, Tony Richards, Nigel Stapledon, Iqbal Syed, Chris Stewart and Marc-Oliver Thurner for helpful comments and discussions. We would like to acknowledge earlier RBA research by Robert Johnson. Views in this paper are those of the authors and not necessarily those of the Reserve Bank of Australia. Authors: foxr and tulipp at domain rba.gov.au Media Office: rbainfo@rba.gov.au Abstract This paper examines whether it costs more to own a home or to rent. We argue this is a useful criterion for assessing housing overvaluation. We use a new Australian dataset, which includes prices and rents for matched properties, letting us value housing in levels. We find that if...
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...1 March 30, 2003 To the reader: You are enrolled in a principles of marketing course. This publication is intended to supplement your lecture materials. As you read through the text, note that it is keyed to illustrations used in class. The course is divided into three sections. Section one covers introduction to marketing, consumer behavior, industrial buyer behavior, the marketing environment, where marketing fits into the organization, market segmentation, and product differentiation. Section two covers product and pricing. Section three covers promotion (sales) and distribution. As you read the book, consider that it is organized as follows: marketing and its environment (consumer behavior, industrial buyer behavior, marketing environment), product, pricing, promotion, and distribution. So, coverage begins with introductory concepts and proceeds into the marketing mix elements (product, price, promotion and place). You may wonder whether this book covers all aspects of marketing. No, it does not cover all aspects of marketing. You will find only basic concepts herein. If you seek specific, contemporary examples of marketing concepts, check out a traditional textbook from the library or purchase a recent edition from a used book store. Try the Perreault and McCarthy textbook (14th edition) or the Kotler and Armstrong textbook. Section I: Concepts of Marketing A. Who is a Marketer? Consider first that marketing is driven by people and their needs. It is people driven...
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...The Industry Handbook http://www.investopedia.com/features/industryhandbook/ Thanks very much for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www.investopedia.com/contact.aspx Table of Contents 1) The Industry Handbook: Introduction 2) The Industry Handbook: Porter's 5 Forces Analysis 3) The Industry Handbook: The Airline Industry 4) The Industry Handbook: The Oil Services Industry 5) The Industry Handbook: Precious Metals 6) The Industry Handbook: Automobiles 7) The Industry Handbook: The Retailing Industry 8) The Industry Handbook: The Banking Industry 9) The Industry Handbook: Biotechnology 10) The Industry Handbook: The Semiconductor Industry 11) The Industry Handbook: The Insurance Industry 12) The Industry Handbook: The Telecommunications Industry 13) The Industry Handbook: The Utilities Industry 14) The Industry Handbook: The Internet Industry Introduction Industry analysis is a type of investment research that begins by focusing on the status of an industry or an industrial sector. Why is this important? Each industry is different, and using one cookie-cutter approach to analysis is sure to create problems. Imagine, for example, comparing the P/E ratio of a tech company to that of a utility. Because you are, in effect, comparing apples to oranges, the analysis is next to useless. In each section we'll take an in-depth look at the different valuation techniques and buzz words...
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...environment (Wikipedia-Lean Manufacturing, 2013).Toyota is focused on making a product that will help the natural environment and cut down on waste. Our new line of Hybrids shows our corporate commitment to innovation and environmental sustainability. The following marketing programs outlines the ways in which Toyota will evaluate the macro-environment, determine a target market for the Hybrid line, as well as our plans for the product its self, a pricing strategy, our placement of the product as well as promotion efforts. One of the big questions is why? Why did we create this product; well it is simply because there was a massive demand for it. Oil prices are through the roof, and consumers do not want to spend their paychecks at the pumps. In 2008, there was a huge spike in the oil prices. This spike has temporarily decreased but oil prices are predicted to rise again soon. Both consumer households and government are demanding us to create a new product that is affordable and sustainable. Consumers are not only demanding this product from us, they are also demanding a change in the market; a change in the way companies are manufacturing their inventory. With the hybrid Prius, Toyota has stepped up to the challenge. Because we are able to control our large scale manufacturing with ease, and have strong knowledge of the market, we have been...
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...consumer trends that support this issue. “The Lipstick Effect” is the phenomenon of the rise of small self-treating on make-up and gadgets when people forego extravagant purchases such as cars and holidays in times of recession. This tendency is all about consumers' sustained need to enjoy consumption and express their identity despite their pressured lives. Overall, consumers may scale down on purchases and live with delayed gratification by saving and investing more in retraining and putting more energy into getting better value. But the definition of value will be different for different products. For instance, consumers will seek the lowest price for products that serve basic needs such as food, whereas in self-treating and small luxuries, the value of feeling indulged is given precedence. The Lipstick Effect endures. Consumers still appear willing to splurge on prestige items. This has led to a huge wave of websites on how to be frugal but also keep up appearances. . Commentators, journalists and bloggers are certainly signalling 2009 as a year of fear, anxiety and uncertainty for consumers who, in order to fight back against these pressures, will need to engage with them using resourceful coping strategies. These include immersing themselves in the safety and comfort of their home cocoons, voluntarily trimming spending, redefining their relationship with brands so that this becomes more of a dialogue rather than a...
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...decision methods of businesses or other management units. As such, it bridges economic theory and economics in practice.[2] It draws heavily from quantitative techniques such as regression analysis, correlation and calculus.[3] If there is a unifying theme that runs through most of managerial economics, it is the attempt to optimize business decisions given the firm's objectives and given constraints imposed by scarcity, for example through the use of operations research, mathematical programming, game theory for strategic decisions,[4] and other computational methods.[5] Managerial decision areas include: • assessment of investible funds • selecting business area • choice of product • determining optimum output • determining price of product • determining input-combination and...
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...82476 c02.3d GGS 3/17/09 15:15 r r r r r r r r r r r r r r r r r r r r r r r r r rr ECONOMIES AND SCOPE OF SCALE 2 r r r r r r r r r r r r r r r r r r r r r r r r r rr F ew concepts in microeconomics, if any, are more fundamental to business strategy than economies of scale and the closely related economies of scope. Economies of scale allow some firms to achieve a cost advantage over their rivals. Economies of scale are a key determinant of market structure and entry. Even the internal organization of a firm can be affected by the importance of realizing scale economies. We mostly think about economies of scale as a key determinant of a firm’s horizontal boundaries, which identify the quantities and varieties of products and services that it produces. The extent of horizontal boundaries varies across industries, along with the importance of scale economies. In some industries, such as microprocessors and airframe manufacturing, economies of scale are huge and a few large firms dominate. In other industries, such as apparel design and management consulting, scale economies are minimal and small firms are the norm. Some industries, such as beer and computer software, have large market leaders (Anheuser-Busch, Microsoft), yet small firms (Boston Beer Company, Blizzard Entertainment) fill niches where scale economies are less important. An understanding of the sources of economies of scale and scope is clearly critical for formulating and...
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...Principles of Marketing – MGT301 VU MGT - 301 Lesson – 1 PRINCIPLES OF MARKETING Overview of Course: This subject/course is designed to teach the basic principles of Marketing to diverse audience/students, including those who are studying this as a supporting subject for their bachelor degree program. This course is designed to provide you the foundations of Marketing whether you intend to work in field of the marketing or not. Marketing is part of all of our lives and touches us in some way every day. To be successful each company that deals with customers on a daily basis must not only be customer-driven, but customer-obsessed. The best way to achieve this objective is to develop a sound marketing function within the organization. To be understandable and lively means that we need to communicate you. We start every chapter with learning objectives. The most important thing you will get out of this course is the basic skills required to succeed in today’s competitive environment. Marketing is defined as a social and managerial process by which, individuals and groups obtain what they need and want through creating and exchanging products and value with others. Marketing is a key factor to business success. The marketing function not only deals with the production and distribution of products and services, but it also is concerned with the ethical and social responsibility functions found in the domestic and global environment. Introduction of Marketing What image comes...
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...Dissertation on the Real Estate Sector of Mumbai and the Indian Middle Class Abstract The global financial meltdown had hit the real estate sector all around the globe, and Mumbai real estate sector is one such amongst them. The specific segment is plagued by reduction of demands, lowering of prices, inventory accumulation etc. In order to maintain their sustenance, they now want to target the middle class segment of the society. The entire purpose of this dissertation was to identify in the present economic conditions of the country, the target customer for such real estate sector. In order to conduct the research, a mixed research methodology is adopted deploying both qualitative research as well as quantitative research. Relevant research instruments were chosen, and 10 respondents were interviewed for the qualitative research and 300 individuals were undertaken in the quantitative research methodology. It was found that indeed the middle class with their high aspiration levels, and disposable income were the ideal target for real estate. However, in order to further attract the target customers, a host of suggestions are made. This dissertation is created through thorough referencing from academic journals, books, reports, newspaper articles etc. This paper would also be immensely helpful for students aiming to understand a clear picture of the real estate sector of Mumbai on ways to maintain its growth. Table of Contents Abstract 2 Introduction 5 Background...
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...wants are unlimited, the resources available to fulfill those wants are limited. Economists assume that people are rational in the sense that consumers and firms use all available information as they take actions intended to achieve their goals. Rational individuals weigh the benefits and costs of each action and choose an action only if the benefits outweigh the costs. Although people act from a variety of motives, ample evidence indicates that they respond to economic incentives. Economists use the word marginal to mean extra or additional. The optimal decision is to continue any activity up to the point where the marginal benefit equals the marginal cost. 1.2 The Economic Problem That Every Society Must Solve (pages 8–11) Discuss how an economy answers these questions: What goods and services will be produced? How will the goods and services be produced? Who will receive the goods and services produced? Society faces trade-offs: Producing more of one good or service means producing less of another good or service. The opportunity cost of any activity—such as producing a good or service—is the highest-valued alternative that must be given up to engage in that activity. The choices of consumers, firms, and governments determine what goods and services will be produced. Firms choose how to produce the goods and services they sell. In the United...
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...about the allocation of scarce resources Examine some of the tradeof fs that people face Learn the meaning of oppor tunity cost See how to use marginal reasoning when making decisions TEN OF PRINCIPLES ECONOMICS Discuss how incentives af fect people’s behavior The word economy comes from the Greek word for “one who manages a household.” At first, this origin might seem peculiar. But, in fact, households and economies have much in common. A household faces many decisions. It must decide which members of the household do which tasks and what each member gets in return: Who cooks dinner? Who does the laundry? Who gets the extra dessert at dinner? Who gets to choose what TV show to watch? In short, the household must allocate its scarce resources among its various members, taking into account each member’s abilities, efforts, and desires. Like a household, a society faces many decisions. A society must decide what jobs will be done and who will do them. It needs some people to grow food, other people to make clothing, and still others to design computer software. Once society has allocated people (as well as land, buildings, and machines) to various jobs, 3 Consider why trade among people or nations can be good for everyone Discuss why markets are a good, but not per fect, way to allocate resources Learn what determines some trends in the overall economy 1 TLFeBOOK 2 4 Ten Principles of Economics PA R T O N E INTRODUCTION scarcity the...
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...case explores the issue of licensing and how successful firms can become unsuccessful. It is not a case about Apple and why it has become successful. This case study explores the rise of the Apple Corporation. The Apple iPod is one of the most successful new product launches in recent years, transforming the way the public listens to music, with huge ramifications for major record labels. More than 50 million MP3 players are expected to be sold in 2005; over a third more than last year. Mobile phones have long been regarded as the most credible challengers to MP3 players and iPods. The launch of digital download services via mobile phones illustrates the dramatic speed of convergence between the telecom and media industries, which many observers expect to usher in a new era of growth for mobile phones. Users are willing to pay more for additional services and many analysts predict that mobile phone handsets will eventually emerge as the dominant technology of the age, combining personal organisers, digital music players and games consoles in a single device. Indeed, Microsoft founder Bill Gates has predicted that mobile phones will supersede the iPod as the favoured way of listening to digital music. The launch of the Apple ipad in 2010 makes this case even more topical. This should form the basis of supplementary questions at the end of the case: How will the iPhone succeed? What about Android and the rise of HTC and Samsung? The mobile phone market is very competitive. ...
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...and exchanging products and value with others.” Kotler and Armstrong (2008) define marketing as “The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.” Core Marketing Concepts 1. Needs – The basic concept underlying marketing is that of human needs. Needs comprise of those things that human beings feel they cannot do without e.g. food, clothing, shelter, safety, education etc. 2. Wants – Are forms of human needs that improve on their well being but which they can do without. Wants are the form of human needs taken as they are shaped by culture and individual personality for example urbanites want Television sets. 3. Demand –Demand is the quantity of a commodity...
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