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TimJ.SmithPricingStrategy:SettingPriceLevels,ManagingPriceDiscounts,EstablishingPriceStructuresPowerPointbyTimJ.Smith,PhDManagingPrincipal,WiglafPricingAdjunctProfessorofMarketingEconomics,DePaulUniversity?2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.
Chapter1BoundariesofaGoodPriceUsingExchangeValueModelsto
UnderstandPriceCompetitionandDefineYourValueAdd?2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.
?2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AgendaWhoisinvolvedinpricingdecisions?Whyispricingsoimportanttothehealthofthefirm?Canfirmsinfluencetheirpricingpower?Whatisthenatureofagoodprice?Howrelevantaremarginalcostsandconsumersurplusinsettingagoodprice?Howshouldthecomparablealternativesonthemarketinfluencethepricingofaproduct?Howcanexchangevaluemodelsbeusedtosetprices?StretchQuestion:Howareexchangevaluemodelsrelatedtomarketsegments?
?2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PricingErrorsAreCostlyToohighLostprofitsfromlackofvolumeThepriceiseventuallydroppedandthecompanymustfightformarketinterestandperceptionrepositioningPotentialallegationsofpricegougingandunfairness,leadingtopublicrelationsandregulatoryramificationsToolowForgoneprofitinanattempttogainvolumewhichmaynotcomeIncorrectlysetexpectationsfortheproductcategory,makingfuturepriceincreasesbeingdrivenagainstaheadwindofcustomerexpectationsUltimately,lostprofits,revenues,andashrinking/irrelevantfirm
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