MRKTNG 3000 1nd Edition Lecture 12 Outline of Last Lecture I Distribution a Coverage strategies b Retailing Outline of Current Lecture II Pricing a Objectives b Pricing strategy for new products c Strategy for existing products d Pricing methods Current Lecture Pricing policy Select pricing objective determine demand estimate cost analyze competitors select pricing method select final price Pricing existing and new products objectives Segmentation and positioning Signal of product quality Profit goals Market share goals Social responsibility Price should reflect goals and target market Price is a signal for quality economic signaling theory Pricing strategy new products Penetration pricing set price low immediate market share 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 Price skimming set price high quick large profits Conditions favoring new product pricing strategies Penetration Price elasticity high Standards issue present Technological change Low Entry barriers Low Skimming PE Low SI Absent TC High EB High Pricing strategy existing products Perishability distinctiveness nature of competition based on product characteristics Pricing methods Mark up pricing unit variable cost fixed costs unit sales unit cost Markup pricing calculation based on the selling price unit cost desired return on sales markup price Perceived value pricing Going rate competitive pricing Break even analysis Break even point that quantity of output at which total revenue equals total costs assuming a certain selling price Equals total fixed costs price unit variable costs Promotional pricing Loss leader Special event Cash rebates Low interest financing Longer payment terms Warranties and service contracts Psychological discounting deceptive reference prices Discriminatory pricing to consumers Legal as long as it doesn t hinder competition Price discrimination Texas Pharmaceuticals Top 5 drugs 131 higher Synthroid 1597 higher Should it be legal For it to work Market must be segmentable No selling across segments Servicing segments cannot be greater that profits gained Must not breed resentment or ill will Must be legal