BUSSPP 0200 1st Edition Lecture 14 Outline of Last Lecture I Product Life Cycle cont Outline of Current Lecture I Price Pricing II Strategies Current Lecture I Price Pricing A Definition of price amount of money that a seller is asking or a buyer is bidding for a product 1 Contains all known information 2 Refers to the idea that both parties to the transaction have complete symmetric information B Definition of pricing process by which price is arrived at 1 Decision making process C Decision making process 1 Objectives of pricing a Profit focus nudges prices upward i Maximizing ii Satisficing target setting b Market Share nudges prices downward i Attract customers increase market share with low prices c Status Quo Pricing keeps prices constant i customers much prefer a stable price for a predictable period of time ii Won t have to adjust frequently d Entry Barrier Pricing nudges price downward i Someone is going to attempt to enter the market ii Lower price e Survival i when a firm believes that its existence is threatened it does These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute weird things with prices ii Drop prices generate as much as possible get out iii Lower raise prices on certain things etc II Strategies A Primary 1 Focus on demand a Up raise price b Down drop price c Price at maximum adjust for demand d May adjust in real time or in anticipation of future demand e In anticipation of spring break hotel prices in spring break towns go up long before demand is actually observed 2 Focus on Cost a set price as to cover costs and hopefully make a profit 3 Focus on Competition a Price similarly to competition 4 Auction Pricing a buyer pricing b reserve price seller won t sell below x 5 Negotiations a involve both parties setting price b house buying concept i price not set by one party common agreement c jobs negotiation is acceptable within bounds i signing bonus ii Time of vacation accumulation iii Moving Expenses iv Schedule home long hours long weekend etc 6 Gray Market crossing a border to obtain legal illegal goods at a lower price for personal consumption B Secondary
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