Examples of price elasticity in the following topics:
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- Cranberry juice, therefore, is an elastic good because a change in price will cause large decrease in demand.
- Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.
- Price elasticities are almost always negative, although analysts tend to ignore the sign even though this can lead to ambiguity.
- The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one (in absolute value): that is, changes in price have a relatively large effect on the quantity of a good demanded.
- Various research methods are used to determine price elasticity, including test markets, analysis of historical sales data, and conjoint analysis.
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- Pricing objectives or goals give direction to the whole pricing process.
- Determining what your objectives are is the first step in pricing.
- When deciding on pricing objectives, you must consider:
- Hence, it is important to keep all investments in mind when setting prices.
- Explain why pricing objectives focus on delivering a return on investment (ROI)
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- Since pricing has a direct impact on a company's revenue, and thus profit, setting the right price is essential to a company's success.
- A high price indicates high quality.
- Price can lead to a firm's survival or demise.
- Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, it will often affect the demand and sales as well.
- A high price indicates high quality.
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- Price discrimination's effects on social efficiency are unclear; typically such behavior leads to lower prices for some consumers and higher prices for others.
- Companies must be able to identify market segments by their price elasticity of demand;
- For example, airlines routinely engage in price discrimination by charging high prices for customers with relatively inelastic demand--business travelers --and discount prices for tourists who have relatively elastic demand.
- Price varies according to demand: larger quantities are available at a lower unit price.
- Construct the concept of price discrimination relative to legal concerns in pricing
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- Still others are constructed from cross price elasticity of demand data from electronic scanners.
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- It includes developing the content; describing the product or services and special features, creating a marketing budget that includes advertising and promotional needs, describing the business-its location any advantages or disadvantages it may have, the staffing developin a pricing strategy, forecasting the company's financial future and defining the market segment as well as the competition
- A well-balanced and complete plan should provide information on the current condition of the company, staffing, financial data, product information that includes pricing, infrastructure marketing data and value added services.
- Marketing Strategy- segmented - product mix, perceptual mapping, product life cycle, branding information, customer, geographic, distribution channels, pricing, discounts and allowances, price elasticity and customer sensibility promotional goals advertising reach that includes frequency, flights, theme and media types, electronic and online promotions, public relations, word of mouth (buzz marketing), viral opportunities,
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- The price is the amount a customer pays for the product.
- Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well.
- From the marketer's point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay.
- A good pricing strategy would be the one which could balance between the price floor and the price ceiling and take into account the customer's perceived value.
- Common pricing strategies include cost-plus pricing, skimming, penetration pricing, value-based pricing, and many more.
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- Demand-based pricing, also known as customer-based pricing, is any pricing method that uses consumer demand - based on perceived value - as the central element.
- These include: price skimming, price discrimination, psychological pricing, bundle pricing, penetration pricing, and value-based pricing.
- Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time.
- Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers.
- By definition, long term prices based on value-based pricing are always higher or equal to the prices derived from cost-based pricing.
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- Psychological pricing is a marketing practice based on the theory that certain prices have meaning to many buyers.
- Inferring quality from price is a common example of the psychological aspect of price.
- Another manifestation of the psychological aspects of pricing is the use of odd prices.
- We call prices that end in such digits as 5, 7, 8, and 9 "odd prices. " Examples of odd prices include: $2.95, $15.98, or $299.99 .
- Psychological pricing is one cause of price points.
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- Competition-based pricing describes a situation where a firm has a pricing policy that reflects the pricing decisions of competitors.
- Competition-based pricing describes the situation where a firm does not have a pricing policy that relates to its product, but reflects the pricing decisions of competitors.
- Similar to competition based pricing, going rate pricing reflects the price that is being used by most of the companies within the industry, an industry standard more or less.
- It can lead to price wars.
- Show the basis of competitor-based pricing as a general pricing strategy