Study Document
Pricing Decisions Term Paper
Pages:2 (714 words)
Sources:1+
Subject:Health
Topic:The Decision
Document Type:Term Paper
Document:#67445256
Pricing Decisions
In today's competitive environment, pricing has emerged as a critical business competency. Executives in consumer, industrial, and service sectors must be prepared to face complex pricing challenges and to leverage pricing in order to capture the greatest market advantage.
One of the things in setting prices, the management should look at the elasticity of demand. Elasticity is simply a measure of how items respond to changes in price. The goal is to provide reliable reporting of the sensitivity of an item to a change in shelf price. In analytical terms, elasticity measures the impact of a one-percent change in shelf price (increase or decrease) on revenue. An elasticity of 1.0, for example, would indicate a one-percent decrease in revenue relative to the price change. An elasticity of 2.0 would show a two-percent decrease in revenue for the price change, and so on. Clearly, as the elasticity numbers grow larger, the item is defined as being more price sensitive.
In the given question, I take the case of a common product: personal computers (PC). As usual, the elasticity of computers has grown over time. One aspect for me will be to reduce the prices of the computers, so that I can gain enough market-share. Below I will show how the prices of the PC should be set in response to the external environment.
Competitive Environment and the Price
Pricing of computers is decided in a very competitive environment. Marketers need detailed, reliable reporting of how an item is priced, relative to the market and channel, to understand how best to set and/or adjust price. By understanding the competitive environment, one can provide a richer view of the way a consumer sees pricing in a channel -- whether by most common price, lowest price, average price, highest price or by key price points. Any pricing decision must be considered in the light of the likely reactions of competitors and marketers need to think carefully about the firm's medium- and long-term position in the market relative to the other players.
Price competition becomes a significant factor in markets where products are very similar; in other words, where there…
Sample Source(s) Used
References
Ingenbleek, Paul, Debruyne, Marion, Frambach, Ruud, and Verhallen, Theo M.M. Successful New Product Pricing Practices: A Contingency Approach. Marketing Letters, Vol. 14, No. 4; (2003): 289
Lowengart, Oded, Mizrahi, Shlomo, and Yosef, Rami. Effect of consumer characteristics on optimal reference price. Journal of Revenue and Pricing Management, Vol. 2, No. 3; (2003): 201
Related Documents
Study Document
Pricing Decisions Identification of Strategic
Following this analysis, there are several alternative solutions that the team can adopt for the season. All alternative solutions take into consideration (1) the concessions and the right balance between the price of the tickets and the price of concessions and (2) the way the pricing strategy will encourage the participation of people to the games of the local team. Following this, the alternative solutions seem to include: - offering a
Study Document
Pricing Decisions Coca Cola Product
Pricing Decisions
Describe the strategic implications that would need to be considered in setting a price for that product
The public company selected for this analysis is Coca Cola Company. The identified product of the company is the Coca-Cola 20 fl oz bottle, which can be typically obtained from a convenient store, vending machine as well as super market. There are strategic implications that would need to be taken into
Study Document
Global Pricing Decisions II Proctor
Opportunities: a) the fast growth specific to the Russian market - if only 53% of women reported using regular pads in 1996, a year later, the percentage of women stating the same thing increased to 78% (i.e. A 47% increase) b) the negative perception of tampons allowing a generous market share for pads - if in 1996, 37% of women reported using tampons on a regular basis, in 1997, only 20%
Study Document
Impact of Pricing Decisions
PRICE ANALYSIS Pricing Strategy Analysis: New Line of Coffee-Flavored Energy Drinks by Red BullRed Bull is introducing a new line of coffee-flavored energy drinks into the market. The product and place analyses carried out by the marketing team have all yielded positive feedback, and the company wishes to do a price analysis to complete the four Ps of the marketing mix. The price set will dictate how the new product
Study Document
Pricing Strategies Price and Cost Variables Are
Pricing Strategies Price and cost variables are not fixed. At times, there are some fixed elements to these costs but in many instances these costs are subject to fluctuation. These fluctuations can derive from changes in buying power, changes in commodity prices and other considerations. Likewise, forces in the external environment can bring about changes in the prices the firm can charge. When uncertain variables are fixed, the company can find
Study Document
Pricing Strategies Watch the GE
How do the sites support the positioning and pricing of the three brands? They are dramatically different, with the Monogram site being completely separate, supporting the premium positioning. The site is done to connote the premium position and the use of these appliances in custom homes. GE Profile is more mainstream and focuses on the stylish yet utilitarian aspects of their product line. The GE site itself is more focused