tailieunhanh - Lecture Basic Marketing: A global-managerial approach: Chapter 18 - William D. Perreault, E. Jerome McCarthy

After completing this unit, you should be able to: Understand how most wholesalers and retailers set their prices using markups, understand why turnover is so important in pricing, understand the advantages and disadvantages of average-cost pricing, know how to use break-even analysis to evaluate possible prices, know the many ways that price setters use demand estimates in their pricing. | Chapter 18: Price Setting in the Business World When you finish this chapter, you should 18-2 Chapter 18 Objectives 1. Understand how most wholesalers and retailers set their prices— using markups. 2. Understand why turnover is so important in pricing. 3. Understand the advantages and disadvantages of average-cost pricing. 4. Know how to use break-even analysis to evaluate possible prices. 5. Understand the advantages of marginal analysis and how to use it for price setting. 6. Understand the various factors that influence customer price sensitivity. 7. Know the many ways that price setters use demand estimates in their pricing. 8. Understand the important new terms. Exhibit 18-1 Markup chain in channels 18-3 Key Factors That Influence Price Setting Pricing objectives Discounts and allowances Legal environment Price flexibility Geographic pricing terms Demand Cost Price of other products in the line Competition Price setting Notes Many firms set a price by just adding a standard markup to the average cost of the products they sell. But this is changing. More managers are realizing that they should set prices by evaluating the effect of a price decision not only on profit margin for a given item but also on demand and therefore on sales volume, costs, and total profit. In Wal-Mart’s very competitive markets, this approach often leads to low prices that increase profits and at the same time reduce customers’ costs. For other firms in different market situations, careful price setting leads to a premium price for a marketing mix that offers customers unique benefits and value. But these firms commonly focus on setting prices that earn attractive profits--as part of an overall marketing strategy that satisfies customers’ needs. Instructor’s Note: This slide corresponds to Exhibit 18-1 on p. 505 and Transparency 113. Producer Wholesaler Retailer Cost = = 80% Markup = = 20% Cost = = 90% Markup = = 10% Cost = = 60% Markup = . | Chapter 18: Price Setting in the Business World When you finish this chapter, you should 18-2 Chapter 18 Objectives 1. Understand how most wholesalers and retailers set their prices— using markups. 2. Understand why turnover is so important in pricing. 3. Understand the advantages and disadvantages of average-cost pricing. 4. Know how to use break-even analysis to evaluate possible prices. 5. Understand the advantages of marginal analysis and how to use it for price setting. 6. Understand the various factors that influence customer price sensitivity. 7. Know the many ways that price setters use demand estimates in their pricing. 8. Understand the important new terms. Exhibit 18-1 Markup chain in channels 18-3 Key Factors That Influence Price Setting Pricing objectives Discounts and allowances Legal environment Price flexibility Geographic pricing terms Demand Cost Price of other products in the line Competition Price setting Notes Many firms set a price by just adding a standard .