A laminar boundary layer is a layer
Classified in Economy
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Costs play an important role in setting prices. But,
Like everything else in marketing, good pricing starts with customer. COMPETITION´S
Prices provide an orienting point. The firm must also take into account the
Competitor´s costs, prices and possible price reactions. Thus, the firm can
Decide whether it can charge more, the same or less than competitors. No matter
What price the company charges, it must be certain to give customers superior
Value for that Price. Given the customers´demand, the cost function and
Competitors´ prices, the company is now ready to select a price. So, companies
Select a pricing method that includes one or more of these three considerations.
1.Market-skimming pricing Many companies that invent new products set high
Initial prices to “skim” revenues layer by layer. I.E.- iphone by Apple ($599;
$499 ; $399…) Conditions: 1) the product quality and image must support the
Higher cost; 2) enough low price sensitive consumers; 3) the costs of producing
A smaller volume cannot be so high that they cancel the advantage of charging
More; 4) competitors should not be able to enter the market easily. 2.
Market-penetration strategy Companies set a low initial price to penetrate the
Market quickly and deeply to attract a large number of buyers quickly and win a
Large market share. I.E.. Ikea to boost its success in the Chinese market
Conditions: 1) the market must be highly price sensitive; 2) production and
Distribution costs must decrease as sales volumes increases; 3) the low price
Must help keep out the competition (entry barrier).